Schools and some other businesses with solar panels installed may see significant tax rises when business rate changes come into effect in April 2017.
Some charity, media and solar industry sources have expressed concern that the changes, which mean that small, non-domestic solar installations will no longer be exempt from business rates, may make solar installations less attractive to schools.
While the precise impact on schools with solar projects remains unclear, one climate change charity has estimated that a school with a 10kW solar installation could be taxed up to £800 more each year. Baroness Jones, a Green peer, has been quoted in the Guardian arguing that ‘the business rate charges will stop any plans for more solar panels.’
The changes will only affect systems where the energy is generated for use by the school. Schools that export their power to the grid or to a third party, or whose system is owned by a third party company, will not see any change.
Private schools, academy trusts, foundation and voluntary aided schools with charitable status will not be affected by the changes, as they are currently exempt from paying rates.
If the changes have the effect anticipated by some critics, maintained schools may need to consider working with a third party provider which will own the panels, meaning that they will simply pay for the electricity they consume.
A number of third party organisations provide schools with free solar panels, usually on the basis that the school provides the roof space for the panels and agrees to buy the renewable electricity generated for a fixed period.
For further information or advice regarding the new changes, please contact Lynne Follett-Carman at lynne.follett-carman@michelmores.com