How to save your business money when investing in solar and/or EV charging

Investing in solar panels and EV charging points can now save your business from paying as much tax under a new government scheme.

What is the new Super Deduction Tax scheme?

The super-deduction scheme is the most attractive tax incentive for business investment ever offered by a British government.

Business investment plummeted due to the pandemic, so the “Super Deduction Tax” was introduced to boost investment in technology and machinery that benefit productivity and sustainability. Solar PV and EV charge points qualify for the Super Deduction Tax scheme.

How can businesses claim it?

Between 1 April 2021 and 31 March 2023, companies can claim up to 130% (compared to the usual.18% allowance) of their capital allowances back from the government to reduce their corporation tax bill.

As such, it’s only available to Limited companies and not partnerships or the self-employed.

Example scenario

If your company spends £100,000 on a qualifying solar PV system or EV chargers, you can claim a deduction of £130,000 against your profits between 1 April 2021 and 31 March 2023.

As with all capital allowances, if the full deduction cannot be used by your business to set against the profits, a loss will be created, which can be carried forward (or back under the new temporary three year loss carry back rules).