Hire purchase, lease and PPA compared for 50kW to 200kW rooftop solar, with the Annual Investment Allowance worked through properly, not glossed over. Built for manufacturers, warehouses, farms, care homes, hotels and cold stores with a big roof and a big daytime load.
Most commercial solar content online is written by installers, and it treats finance as an afterthought, usually one paragraph comparing a loan to a lease without touching what either route does to the business's tax position. That is the gap this page fills. Avro is a finance broker, not an installer. We arrange asset finance for commercial rooftop solar, structure it against the business's tax position, and are upfront that whether a purchase is the right call for your particular accounts is a conversation for your accountant, not us. Our job is to get the finance structured correctly around the answer.
Six routes exist. Only two of them let the business keep the Annual Investment Allowance.
| Route | Upfront cost | Ownership | Balance sheet | Capital allowances | Typical term | Best suited to |
|---|---|---|---|---|---|---|
| Capital purchase | Full cost, day one | Business, immediately | Asset on balance sheet | Full AIA available | N/A | Cash-rich businesses with no appetite for finance |
| Hire purchase | Deposit only, typically 0-20% | Business, on final payment | Asset on balance sheet from day one | Full AIA available, same as cash purchase | 3-10 years | Businesses wanting the tax relief without tying up capital |
| Finance lease | None or minimal | Funder, business has use of asset | Asset usually on balance sheet under lease accounting rules | No AIA; rentals are a deductible expense instead | 5-10 years | Businesses without profits to shelter, or preferring rental deductions |
| Operating lease | None | Funder throughout | Off balance sheet in most cases | No AIA; rentals deductible | 3-7 years | Businesses prioritising off-balance-sheet treatment over ownership |
| PPA | None | Third party owns and maintains the system | Off balance sheet | None; business buys electricity, not the asset | 10-25 years | Businesses wanting zero capex with no interest in ownership |
| Green loans & grants | Varies by scheme | Business | Asset on balance sheet | Full AIA available where the business owns the asset | Varies | Businesses that qualify for a live scheme, used alongside other finance for the balance |
This table is a simplified comparison. Balance sheet and lease accounting treatment depends on the specific contract terms and applicable accounting standard (FRS 102 or IFRS 16), and should be confirmed with the business's accountant before a route is chosen.
Growth Guarantee Scheme: some of Avro's funder panel can lend hire purchase for commercial solar under the British Business Bank's Growth Guarantee Scheme, a government-backed lending guarantee that can improve the terms available on a qualifying deal. Availability depends on the funder, the borrower and the specific transaction; ask us whether your business qualifies.
Solar PV is normally treated as special rate plant and machinery for capital allowances purposes. Without the Annual Investment Allowance, it would depreciate slowly through the special rate pool. With it, a business can deduct up to £1,000,000 of qualifying spend against taxable profit in the year the asset is bought, a limit that has applied since 2019 and was made permanent from April 2023. Almost every system in the 50kW-200kW range sits comfortably inside that limit.
The allowance depends on the business owning the asset for tax purposes. Under hire purchase, ownership is treated as passing at the start of the agreement even though the final payment is still outstanding, so AIA is available in exactly the same way as a cash purchase. Under a finance lease, operating lease or PPA, the funder or a third party owns the asset, so the business gets a rental deduction or nothing at all instead of the allowance. For a profitable company, that is the difference between a five-figure reduction in this year's corporation tax bill and no immediate relief whatsoever. It is the single biggest lever in this decision, and it is the reason hire purchase is usually the right starting point for a business that expects to be profitable in the year of purchase.
Enter your own numbers. Every figure is shown, nothing is hidden in the total.
Year 1 Cash Position Before Tax
Assumes sufficient taxable profits, enough unused AIA, and that the spend qualifies. On hire purchase, if the panels count as a fixture of the building, relief can follow the capital paid each year instead of arriving in full in year one, so check the timing with your accountant. Not included in the cumulative cash figures below. This is an illustration, not tax advice.
Illustration only, not a quote, offer or tax advice, subject to survey and funder credit approval. See the full calculator page for the assumptions behind every figure. Avro arranges commercial business finance. The regulatory treatment of agreements involving individuals, sole traders or partnerships depends on the borrower, amount of credit and agreement structure.
Assumptions used throughout: 850 kWh generated per installed kWp in Year 1 (a conservative UK-wide illustration), 65% self-consumption on a mixed daytime-load business, electricity at 25p/kWh, export at 6p/kWh, running costs and insurance at £12/kWp/year, hire purchase at an illustrative 8.5% nominal annual rate paid in advance over 120 months, VAT fully recoverable, 25% corporation tax. These match the defaults in the calculator above; run your own numbers there for a different profile. Verify against your own energy contract and confirm current AIA and corporation tax rules before relying on these figures.
Term matters as much as system size, and it can flip the sign. Taking the 100kW system on a shorter 84-month term instead of 120 months pushes the HP payment to roughly £1,337/month, £16,040/year, which leaves the business with a net cash investment required in Year 1 of around £1,642, before any tax relief. Stretching to 120 months lowers the payment enough to leave the deal roughly £1,840/year cash positive instead. Neither figure includes the AIA saving, which applies in Year 1 regardless of term length and is shown separately since it depends on the business having sufficient taxable profits. The right term depends on how the business wants to trade off monthly cashflow against total interest paid over the life of the agreement, and running your own figures through the calculator above is more reliable than defaulting to the shortest or longest option.
Three illustrative sector profiles. Names and exact figures are composite examples, not real clients, built to show how the same maths plays out differently by roof and load.
A 150kW array across a barn roof, sized against grain drying and irrigation pumps running through late summer daytime hours. High daytime self-consumption during harvest makes the export share smaller than a typical warehouse, and AIA is particularly valuable where farm profits are lumpy year to year, since it lets the business time the relief against a strong trading year.
A 200kW roof array sized against a chiller and refrigeration load that runs close to flat across the day, giving very high self-consumption and a fast payback. Warehouses with continuous cold storage or automated handling equipment are typically the strongest commercial solar case, since almost none of the generation needs to be exported at the lower commercial rate.
A 60-80kW system against a genuinely flat daytime and evening load from heating, hot water, laundry and kitchen equipment. Care homes rarely have large roof areas relative to load, so the system is usually sized to the available roof rather than to total consumption, with the finance structured around a modest deposit to protect working capital.
Large flat roofs and a heavy daytime process or refrigeration load.
Barn and outbuilding roofs against drying, cooling and pumping loads.
Continuous heating, hot water and kitchen load across a long day.
Constant refrigeration load or a large single-tenant roof asset.
Avro arranges commercial solar finance for limited companies, LLPs and self-employed commercial entities, for business use only. Deals of this size, £50,000 to £200,000, are well above the £25,000 threshold UK law (FSMA, article 60C) sets for a business finance agreement to qualify as exempt from consumer credit regulation, so this applies equally whether the business trades as a limited company, a sole trader or a partnership.
Avro Asset Finance is a trading name of Avro Fleet Ltd. We do not provide consumer credit or regulated financial products; we arrange unregulated business finance agreements only, and this does not carry the same protections as a regulated consumer credit agreement. We are a broker, not a lender, and we receive commission from funders on completed deals, which varies by funder.
Nothing on this page is a quote, an offer, or tax advice. All figures are illustrative, subject to survey, funder credit approval and site-specific factors. Confirm current AIA limits, corporation tax rates and HMRC treatment of your specific circumstances with your accountant before proceeding.
Yes. Avro arranges asset finance for commercial rooftop solar PV, typically 50kW to 200kW systems, for limited companies and established sole traders, structured as hire purchase, lease or refinance.
Yes. Under hire purchase the business is treated as the owner of the asset from the outset for tax purposes, so it can claim AIA in the same way as a cash purchase, subject to the annual limit and normal HMRC rules.
No. Under a PPA the business does not own the panels, so no capital allowances are available. The business buys electricity at an agreed rate instead of owning the asset.
£1,000,000 per accounting period, a limit that has applied since 2019 and was made permanent from April 2023. Almost every 50kW-200kW commercial system sits well within this.
Roughly £75,000 to £105,000 installed as of 2026, depending on roof type, access and site complexity, before tax relief.
Yes, provided the agreement is for business purposes and exceeds £25,000, which most commercial solar systems comfortably do, qualifying the deal as exempt from consumer credit regulation.
This depends on the finance route. Outstanding hire purchase or lease balances do not automatically transfer, so it needs addressing specifically before a sale or lease assignment is agreed.
It depends on the business's tax position. Hire purchase preserves the AIA and builds equity in an owned asset. A PPA needs no capital outlay but forgoes ownership and capital allowances.
Depot and workplace charging finance, often installed alongside solar.
For businesses financing vehicles as well as solar and infrastructure.
For logistics and haulage operators with warehouse roof space.
For businesses financing vans alongside a solar installation.