Compliance

Business rates on a solar PPA: who pays, and what changes in 2035

For now, business rates barely touch a solar PPA: England, Wales and Scotland all leave renewables plant out of rateable value until 31 March 2035. The land, supports and fixings can still be rated, the rules differ by nation, and most PPAs signed today run well past 2035 — so the contract has to say who carries the liability.

What this means

Business rates are charged on a property's rateable value, and plant and machinery only counts where the valuation regulations say it does. Renewables generation plant has been excluded since April 2022 in England, April 2023 in Scotland and April 2024 in Wales, in each case until 31 March 2035. For a PPA that runs 15 to 25 years, the bigger question is not what you pay today but who carries the cost if that exclusion ends.

Actions to take

• Confirm which nation's rules apply to each site — the start dates and technology lists differ.
• Ask how the array will be assessed: as part of your property, or as a separate one — and record the answer.
• Put a rates clause in the PPA: who pays any rates attributable to the array, now and after 31 March 2035.
• On installations above about 50 kW, expect the supports, brackets and settings to be valued.

What the 2035 exclusion covers

Each nation amended its plant and machinery valuation rules separately, so the exclusion has three legal sources, three start dates and one shared end date. In each case it covers plant used for the generation, storage, transformation or transmission of power where the energy relied on is mainly or exclusively renewable — photovoltaics and solar power among the listed sources.

Two details matter for a PPA. Storage is covered only where the energy it relies on is mainly or exclusively renewable, so a battery charged mostly from the grid sits outside the wording. And Scotland's list is narrower than England's and Wales's: it includes photovoltaics and solar power, but not biogas or heat drawn from air, water or the ground. England brought its start date forward to April 2022; the 2035 end date was set from the outset.

What can still be rated

The exclusion is a valuation rule, not a blanket relief, and the Rating Manual — published by HMRC since the Valuation Office Agency was brought into HMRC on 1 April 2026 — spells out what is left. The value of the renewable plant itself is not included, but "the land and settings accommodating this plant remain rateable". On smaller installations, which the manual illustrates as "say less than 50kW", that residual value is likely to be de minimis. Above that, a value is calculated for the elements that remain rateable, "such as the supports, brackets and settings".

Where the array's power is wholly or mainly for export and greater than 10 kW, the manual says it "will normally constitute a separate hereditament" — a separately assessed property with its own rates bill.

Who is the ratepayer when a PPA provider owns the array?

This is where PPAs sit in a grey area. The Rating Manual covers an energy company that puts panels on a factory roof and exports the power to the network, but it does not deal directly with the typical on-site PPA: a provider-owned array selling most of its output to the building's occupier over a private connection. Its own wording also pulls two ways — one passage describes the exclusion applying where the majority of power is consumed within the property, another says it applies whether the power is consumed there or sold to consumers.

The practical reading follows the facts of each site. An array whose output is mainly used in your building points towards being part of your property, so any rateable element — land, settings, supports — lands on your bill. An array that mainly exports points towards a separate assessment in the provider's name. Neither outcome is automatic, so ask your rating adviser or the Valuation Office how the array will be treated before you sign, and record the answer.

The 2035 question for a 20-year PPA

The exclusion applies to days before 1 April 2035, and no extension has been legislated. A 20-year PPA that starts in late 2026 runs until 2046, so more than half of its term falls after the exclusion's current end date. If the exclusion lapses, the plant could count towards rateable value again, and a PPA that is silent on rates leaves the argument about who pays until the bill arrives.

Three drafting points close the gap: a clause saying which party bears any rates attributable to the array; a change-in-law provision that covers a change to the valuation rules; and a decision on what happens if the cost becomes material — a price adjustment, a cap, or a right to terminate. Rates belong on the list of charges beyond the tariff set out in our guide to the PPA tariff, and they interact with what happens at the end of the contract.

Improvement relief and solar

England's improvement relief gives twelve months' relief from the higher bills that follow when qualifying works increase a property's rateable value, for works completed from 1 April 2024. Qualifying works include adding rateable plant and machinery — but while the exclusion runs, renewables plant is not treated as part of the property, so in our reading of the regulations the panels themselves add no rateable value and cannot trigger the relief on their own. Only the rateable residue, such as the supports on a larger installation, could. Wales has its own improvement relief regulations.

Sources for the figures on this page

This page explains how the rules work; it is not tax or rating advice. Take advice from a qualified rating surveyor on your own property.

FAQs

Business rates on a solar PPA: who pays, and what changes in 2035 FAQs

Do I pay business rates on solar panels installed under a PPA?

Not on the panels themselves, for now. England (from 1 April 2022), Scotland (from 1 April 2023) and Wales (from 1 April 2024) exclude renewables generation plant from rateable value until 31 March 2035. The land and settings can remain rateable, and above about 50 kW the supports, brackets and settings can be valued.

Who pays business rates on a PPA-owned solar array?

The ratepayer for whichever property the array is assessed with. The Rating Manual does not deal directly with a third-party array selling its output to the host: power mainly used in your building points to your property, while an array wholly or mainly exporting more than 10 kW is normally assessed as a separate one. Your PPA should say who bears any rates cost either way.

What happens to business rates on solar after 2035?

The exclusion covers days before 1 April 2035, and no extension has been legislated. If it lapses, solar plant could count towards rateable value again, so a PPA running past 2035 should allocate that risk through its rates or change-in-law clause.

Does adding solar qualify for business rates improvement relief?

Rarely for the panels themselves. England's improvement relief gives 12 months' relief from higher bills when qualifying works completed from 1 April 2024 raise rateable value, but excluded renewables plant adds no rateable value while the exclusion runs. Only rateable elements, such as supports on larger installations, could trigger it.

Are the rules the same in Scotland and Wales?

The dates and the lists differ. Scotland's exclusion runs from 1 April 2023 and Wales's from 1 April 2024, both to 31 March 2035, and Scotland's list of qualifying technologies is narrower — it includes photovoltaics and solar power, but not biogas or heat drawn from air, water or the ground.