Taxpayers placing wind and solar equipment in service over the next decade will be eligible for either investment tax credits or production tax credits related to the production of electricity. Two credits, under Section 45 and Section 48, were modified by the IRA and are currently applicable.
HMRC regard solar installations as a long-life asset, which sometimes reduces relief. However, the installations do qualify for 100% Annual Investment Allowance (which is available for up to £1,000,000 of total qualifying expenditure by most standalone farming sole trades, partnerships or companies in the year ending 31 March 2023).
The Canadian Federal Budget of 2023 offers a 30% refundable Investment Tax Credit for investment in machinery and equipment used to manufacture clean technology - including solar. China Their industrial policy in the last decade has made China the world's leading manufacturer of solar components.
Installations on farm outbuildings (or in fields), which supply electricity to the farm (on its own or in conjunction with the house) or to multiple properties, are commercial. Commercial installations are usually larger than domestic ones. The cost of a commercial solar installation is eligible for capital allowances.
There are two different sets of tax rules, depending principally on whether the installation is domestic or commercial. The contract documentation will state the type of installation. A domestic installation is normally mounted on the farmhouse roof (occasionally in the garden) and provides electricity solely to the dwelling.
With effect from 1 April 2012 for corporation tax and 6 April 2012 for income tax, all capital expenditure on the provision of solar panels is specifically designated as special rate. The reason for designating solar panel expenditure as special rate expenditure was to ensure clarity of treatment.