Commercial solar installations qualify for 100% Annual Investment Allowance (AIA) in the year of installation under current UK tax rules. For a profitable Welsh business paying corporation tax at 25%, this means approximately 25p in tax relief for every £1 spent on a qualifying solar installation.
On a £200,000 system, that is £50,000 of first-year tax relief, reducing the effective net cost to £150,000 and cutting the payback period from 3.4 years to approximately 2.5 years post-tax.
Solar PV is a special-rate pool asset, so the permanent full-expensing regime does not apply to it — that route covers main-rate plant and machinery. AIA is the correct 100% first-year relief for solar and covers up to £1 million of qualifying expenditure per year. Above that cap, special-rate assets attract the 50% first-year allowance instead.