Renewable energy assets don’t share one capital allowances rate. Solar panels are special-rate plant — outside 100% full expensing, with a 50% first-year allowance instead, though the £1m Annual Investment Allowance covers them in full. EV chargepoints keep a 100% first-year allowance until 31 March 2027. Heat pumps in commercial buildings are integral features (special-rate again). And with the main writing-down rate cut from 18% to 14% from April 2026, whatever isn’t relieved in year one now unwinds more slowly than ever — making the sequencing of AIA, full expensing and first-year allowances worth real money.
Which rate applies to which asset
| Asset | Classification | Best first-year route (2026/27) |
|---|---|---|
| Solar panels | Special-rate plant | AIA at 100% (or 50% FYA for companies beyond the AIA) |
| Heat pumps / heating systems (commercial buildings) | Integral features — special rate | AIA at 100% (or 50% FYA) |
| EV chargepoints (new and unused) | Dedicated 100% FYA | 100% FYA — to 31 March 2027 (CT); doesn’t touch your AIA |
| Battery storage, inverters, general plant | Typically main-rate plant | Full expensing at 100% (companies); AIA or the new 40% FYA otherwise |
| Wind turbines and mechanical plant | Typically main-rate plant | Full expensing at 100% (companies) |
Classifications depend on the installation’s facts — what an asset does in your building decides its pool, and plant in residential dwellings is generally outside capital allowances for property businesses. Map the claim before the purchase order.
Sequencing: where the money is
The core move for companies: spend your AIA on special-rate assets first. Main-rate plant already gets 100% through full expensing without touching the AIA — so every pound of AIA allocated to solar or integral features converts a 50% (or 6%) claim into a 100% one.
- Companies: full expensing (100%) on main-rate plant + AIA prioritised to special-rate assets + the dedicated chargepoint FYA, which uses no AIA at all
- Unincorporated businesses and landlords: no full expensing — the AIA does the heavy lifting, supplemented from 1 January 2026 by the new 40% first-year allowance on main-rate assets (which also opened first-year relief to leasing businesses previously shut out)
- Timing: with main-rate writing-down allowances cut to 14% from April 2026, unrelieved balances unwind more slowly — accelerating relief into year one is worth more than it was a year ago
- Disposals: assets relieved through full expensing or the 50% FYA trigger immediate balancing charges on sale proceeds — the exit side of the claim belongs in the plan too
Renewable energy capital allowances FAQs
Can I claim full expensing on solar panels?
No — solar panels are classed as special-rate plant, so they sit outside 100% full expensing; the 50% first-year allowance applies instead. However, the £1 million Annual Investment Allowance covers special-rate assets at 100%, so for most installations the AIA is the better first claim. The right sequencing depends on your total capital spend in the year.
Are solar panels plant and machinery for capital allowances?
Yes — HMRC treats solar panels as plant and machinery, specifically as special-rate expenditure. That means relief through the Annual Investment Allowance (100%), the 50% first-year allowance for companies, or special-rate writing-down allowances at 6% a year — not the 100% full expensing rate that applies to main-rate plant.
Do EV charging points qualify for 100% capital allowances?
Yes — new and unused electric vehicle chargepoint equipment qualifies for a 100% first-year allowance, extended at the Autumn 2025 Budget to 31 March 2027 for Corporation Tax (5 April 2027 for income tax). After that window, chargepoints would fall back to standard plant treatment, so the expenditure date matters.
Should I use the Annual Investment Allowance or full expensing first?
For companies with mixed spend, the usual answer is: allocate the AIA to special-rate assets like solar first, because main-rate assets already get 100% through full expensing without using any AIA. Unincorporated businesses can't use full expensing, so the AIA does the heavy lifting — supplemented from January 2026 by the new 40% first-year allowance on main-rate assets. The optimum depends on the year's total spend and asset mix.
What capital allowances apply to heat pump installations?
In commercial buildings, heating systems — including heat pumps — are integral features, which means special-rate treatment: 100% through the Annual Investment Allowance, the 50% first-year allowance for companies, or 6% writing-down allowances. Plant installed in residential dwellings is generally outside capital allowances for property businesses, so the building's use matters as much as the asset.
Godwin Pinto ACA (ICAI) is the founder of AccTek and a member of ICPA, with 20+ years of experience in accounting and tax for contractors, startups and SMEs. Previously at PwC.
Official guidance: first-year allowances, including full expensing, the 50% special-rate allowance and the chargepoint allowance, are at GOV.UK first-year allowances, and the Annual Investment Allowance at GOV.UK AIA guidance. AccTek Ltd is an independent accountancy practice and is not affiliated with HMRC or GOV.UK. This guide is general information based on 2026/27 rules, not advice on your specific expenditure.
The asset is green. Make sure the claim is too.
Classification, sequencing across AIA, full expensing and first-year allowances, and the disposal position mapped before you commit the spend — as part of our renewable energy accounting service.
