The Solar Trade Association reports that it has found that business rates taxes on commercial rooftop solar installations are likely to rise between 6 and 8 times from April next year unless ministers intervene.
According to Paul Barwell, CEO of the Solar Trade Association, “This is a huge increase in the running costs of a rooftop solar installation that will affect both existing and new projects. In some cases, it would actually send installations into negative returns; you would be spending more on the system in tax and maintenance than you would be getting back from the sale of power and the Feed-in-Tariff support.”
He then went on to stress that ministers need to support the industry and recognise that solar is a unique technology with costs and revenues having come down over the past 5 years. “This has created a complete mis-fit with the business rates system that needs to be fixed, or else we will face a prohibitive tax hike in this sector.”
The problem centres on the rateable values that come into force for rooftop solar next year which are based on fixed assumptions about the capital costs of the installation rather than the revenue generated.
The Solar Trade Association has been talking with the Valuation Office Agency and equivalent bodies but the problem is caused by the way business rates legislation is worded, something only government can resolve, which is why ministers need to step in.
Paul Barwell concluded by saying that “This is a complex issue. We believe the methodology shouldn’t be applied to solar rooftops in this way. We now plan to work with the three different government departments – Treasury, Communities and Local Government and Energy – to discuss our proposals to exempt self-owned rooftop solar from business rates altogether. Ministers must act now, otherwise the tax rise will all but eliminate the incentive for businesses to invest in solar.”
Domestic solar homes are not affected.