Funding Solar – Super Deduction Tax

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15th Jun 2021

How to save your business money when investing in renewable energy

Investing in solar panels and EV charging points for your business can now save you from paying as much tax under the government’s new super deduction scheme.

Due to the pandemic, levels of business investment have fallen. The government has introduced the “Super Deduction Tax” to encourage businesses to invest back into machinery and technology that will benefit productivity and sustainability.

Between 1 April 2021 and 31 March 2023 companies can claim up to 130% of their Capital Allowances back from the government on qualifying investments. Solar PV and EV charge points are both on the list of qualifying investments.

The super-deduction will allow companies to cut their tax bill by up to 25p for every £1 they invest.

For a company looking to spend £100,000 on a solar PV system, their taxable liability could be reduced as follows;

The company makes pre-tax profit of £200,000

CT due @19% – £38,000

Investing in a Solar PV / Storage / EV Chargers –  £100,000

The company makes pre-tax profit of £200,000

Allowed super tax expense for tax calculation @130% = 200-130 = £70,000

CT due @19% – £13,300

So a CT saving of £24,700   (Actual saving due to extra 30% write off – £5,700)

This scheme is amongst the world’s most competitive and makes investing in solar energy or EV charging system very attractive.

To find out more about the benefits of solar for your business complete the form below or contact us directly.

For more in depth information on the Super Deductions as a whole, click here.

*The Little Green Energy Company do not provide tax or accounting advice. This content has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax or accounting advice.