UK rooftop commercial solar PV is exempt from business rates valuation when the system is owned by the rate-payer of the same hereditament and the electricity is consumed predominantly on site. The exemption was introduced by the Valuation Office Agency in 2017 to remove a perverse disincentive to on-site renewable generation, originally to expire in 2025, and was extended in the 2022 Spring Statement to 2035. For a typical commercial site, the saving is around 50-200 pounds per installed kW per year in avoided rates uplift — for a 250 kW system, that is 12,500-50,000 pounds per year of additional cost that would otherwise apply. This page lays out the exemption rules in full, what qualifies and what does not, the claim process, the position for multi-tenant buildings, and how it works in the devolved nations of Scotland, Wales, and Northern Ireland.
The headline rule: rooftop self-consumed PV is exempt
Under the Valuation for Rating (Plant and Machinery) (England) Regulations 2000, as amended in 2017 and 2022, micro-generation plant on the same hereditament as the rate-payer is excluded from rateable value calculation if it generates renewable electricity primarily for use on that hereditament. The 2017 amendment introduced this for solar PV and storage; the 2022 extension to 2035 was made because the Treasury and DESNZ recognised that bringing rates back into the calculation would discourage commercial decarbonisation just at the moment the country needs more of it.
The practical effect: a 100 kW solar PV system installed on the roof of a manufacturing unit, owned by the manufacturer who is the rate-payer, used predominantly to supply that manufacturer's own consumption, does not increase the rateable value of the hereditament. Without the exemption, the VOA approach to plant and machinery valuation would have added an estimated 50-200 pounds per kW per year to the rateable value, increasing the rates bill by roughly that amount times the local Uniform Business Rate (currently 51.2p in the pound for the 2026/27 fiscal year).
Worked example: 250 kW system on a manufacturer's roof, capital cost 195,000 pounds. Without exemption, estimated rateable value uplift around 25,000 pounds per year, rates bill uplift around 12,800 pounds per year (at 51.2p UBR). Across 25 years of operation that is 320,000 pounds of avoided rates — comparable in scale to the avoided electricity cost. The exemption is genuinely material to the project IRR, not a minor footnote.
What qualifies for exemption
Three conditions must all be met for the exemption to apply.
- Same hereditament. The PV system must be installed on or in connection with the rateable property (the hereditament). Rooftop installations on the building's own roof clearly satisfy this. Curtilage car-park canopy installations integral to the same operational unit also qualify. Adjacent ground-mount on a separately rated parcel of land does not.
- Owned by the rate-payer. The owner of the PV system must be the same legal entity as the rate-payer of the hereditament. Owner-occupier sites and tenant-owned installs (where the tenant is the rate-payer) qualify. PPA installations where a third party owns the system have to be assessed differently — see below.
- Predominantly for use on that hereditament. More than 50 percent of generation must be consumed on the hereditament. Typical commercial sites with reasonable load match achieve 70-90 percent self-consumption and clearly satisfy this. Export-heavy or oversized systems where less than 50 percent is self-consumed do not qualify for the exemption — though these are rare in practice because the underlying business case rarely supports them.
What does NOT qualify
Export-only systems. A solar farm or rooftop array sized purely to export to the grid for SEG revenue, with minimal or no on-site consumption, does not qualify. Such systems may face their own rateable value uplift as commercial generating plant.
Ground-mount on separately rated land. Solar arrays installed on land that is held under a separate freehold or lease and rated separately from the building they supply do not qualify for the building's rates exemption. Historically some sites have argued that adjacent ground-mount serving the building should be treated as part of the same hereditament — VOA practice is increasingly to treat them as separate.
PPA installations. In a Power Purchase Agreement the third-party PPA provider owns the system and sells the generated electricity back to the host site. The host site is not the system owner so the rates exemption test is not met for the host. The PPA provider may face their own rates assessment for the PV asset on a third-party land position. In practice the VOA has generally treated PPA installations sympathetically given the policy intent to encourage commercial decarbonisation, and we have seen exemptions extended to PPA-owned arrays where the predominant consumption is on the host hereditament. Always seek written VOA confirmation on PPA structures.
Battery storage exporting to grid services. A battery system used purely for grid services (frequency response, capacity market) without significant self-consumption support may face its own rates assessment. Behind-the-meter battery storage primarily used to time-shift solar self-consumption clearly qualifies as part of the exempt PV system.
The claim process
Most local authorities apply the exemption automatically when notified of a qualifying install. The recommended process:
Step 1: At commissioning
Your installer issues commissioning paperwork (G98 or G99 confirmation, MCS certificate where applicable, electrical installation certificate). Take a copy of these documents.
Step 2: Notify the VOA and council
Write to the Valuation Office Agency and copy your local authority business rates department within 30 days of commissioning. The letter should include: business name and rateable property address, VOA reference number for the hereditament, install date, system capacity in kW, system owner (confirm it is the rate-payer), commissioning paperwork copies, and a statement that the system is used to supply the hereditament with predominant self-consumption.
Step 3: VOA confirmation
The VOA reviews the application and confirms the exemption. The PV does not feed into the rateable value calculation. Most cases are processed within 4-12 weeks. Disputes (rare on routine installs, occasional on PPA or large oversized systems) can take 6-12 months.
Step 4: Annual review
The exemption is preserved on revaluation as long as the qualification conditions are maintained. Major changes to the building (extensions, change of use, multi-tenant conversion) should trigger a review of whether the exemption still applies.
Multi-tenant buildings
Multi-let buildings (high-street parades, multi-tenant office blocks, retail parks) raise complications because the building is split into multiple hereditaments, each with its own rate-payer.
Common scenario 1: Landlord-owned rooftop PV serving common areas only. Landlord owns the roof, installs PV, electricity supplies common-area lighting, lifts, air handling. The landlord pays rates on the common area as a separate hereditament. The PV is owned by the landlord and supplies the landlord's own hereditament — exemption applies. Common interpretation by VOA.
Common scenario 2: Landlord-owned rooftop PV serving tenants under private wire. Landlord owns and installs PV, electricity is sold to tenants via a private wire arrangement (sometimes called Behind-the-Meter Supply). The PV owner is the landlord but the supply is to tenants. VOA treatment varies — case-by-case. Some VOA officers apply the exemption on the basis that the building as a whole is a connected commercial entity; others treat the PV as a separate generating business with its own rates assessment. Always seek written VOA confirmation before assuming exemption.
Common scenario 3: Tenant-owned rooftop PV. A single dominant tenant occupying most of a multi-let building installs PV with landlord consent, owns the system, consumes the electricity. Exemption applies on the tenant's hereditament where the PV is owned by the rate-payer.
The 2026 revaluation
The next general revaluation of the rating list takes effect in April 2026 (replacing the 2017 list). Rateable values are recalculated based on rental evidence and physical attributes of the property. The solar PV exemption is preserved through revaluations — the exempt PV does not feed into the rateable value calculation. Verify this is reflected in your 2026 rating list entry by checking the VOA portal and challenging any incorrect uplift attributable to the PV asset. Local authorities are required to honour the exemption automatically; errors are corrected through the standard rates appeal process.
Devolved nations
Scotland
Non-domestic rates in Scotland are administered by the 32 local authorities and Scottish Assessors. Scottish Government policy mirrors the VOA position: rooftop solar PV with predominant on-site consumption is exempt from rateable value calculation. The Scottish Assessor for your council is the contact for confirmation. Scotland has additionally offered some Small Business Bonus relief that interacts with renewable installations on smaller premises — check with your council.
Wales
Welsh business rates are administered by the 22 local authorities under Welsh Government guidance. The exemption mirrors the English VOA approach. Welsh Government Energy Policy and Regulation team has confirmed extension to 2035 in line with the Treasury policy.
Northern Ireland
Rates in Northern Ireland are administered by Land and Property Services within the NI Department of Finance, separate from England, Scotland, and Wales. NI rates exemption for rooftop solar PV with predominant self-consumption is similarly available — contact LPS for the equivalent claim process.
Interaction with other reliefs
Solar PV business rates exemption stacks cleanly with other reliefs.
- Capital allowances: 100 percent AIA on PV capex. Independent of business rates. See capital allowances.
- VAT recovery: standard 20 percent VAT recovered through normal returns for VAT-registered businesses. Independent. See VAT.
- Small Business Rates Relief (SBRR): smaller businesses with rateable values below 15,000 pounds get reduced rates — independent of and in addition to the PV exemption.
- Improvement Relief: introduced in April 2024, gives 12 months of rates relief on improvements to property. The PV install itself is exempt anyway, but other concurrent improvements (roof replacement, structural reinforcement, building services upgrade) may qualify for improvement relief.
Worked example: rates exemption value over 25 years
A regional distribution business in the West Midlands installs a 500 kW rooftop PV system on its 80,000 sqft warehouse in 2026. Without the rates exemption, the VOA approach to plant and machinery valuation would add approximately 100 pounds per kW per year to the rateable value — total uplift around 50,000 pounds per year. The local Uniform Business Rate of 51.2p in the pound applies, giving an annual rates bill uplift of around 25,600 pounds per year if the exemption did not apply. Over the 25-year project life that totals approximately 640,000 pounds of avoided rates, scaled by the UBR which itself rises broadly with inflation. The rates exemption is therefore comparable in 25-year value to a meaningful proportion of the install capex itself. For project DCF purposes we always model the exemption explicitly — assuming the exemption ends in 2035 (current legislative sunset) and a possible reversion to taxable status would shave 1-2 points off project IRR. Most commentators expect the 2035 sunset to be extended again given the policy direction; we model both scenarios as sensitivity.
What if my landlord owns the rooftop PV?
A common arrangement on multi-tenant commercial buildings: the landlord installs PV on the building roof, claims AIA for their own corporation tax, and supplies tenants under a private wire agreement at a per-kWh rate. The rates exemption position depends on the supply arrangement. If the landlord is the rate-payer for the common areas (lifts, lighting, plant rooms) and the PV serves predominantly that common-area consumption, exemption applies on the landlord's hereditament. If the PV serves predominantly tenant consumption via private wire, the position is less clear and depends on whether the VOA treats the landlord-tenant arrangement as a single connected commercial entity. Always seek written VOA confirmation. From a rates perspective, the cleanest arrangement is solar consumed by the system owner on their own hereditament; multi-party supply chains create complications worth specifically modelling.
Authority resources
Valuation Office Agency rateable values portal: gov.uk Business Rates. VOA rating manual on plant and machinery: VOA Rating Manual. Department for Levelling Up business rates guidance: gov.uk Local Government Business Rates. Scottish Assessors Association: SAA.
Related decision pages
For VAT see VAT on commercial solar. For capital allowances see capital allowances solar panels. For grants see grants and funding and commercial solar grants. For sector-specific cases see factories, warehouses, offices, hotels. For finance route comparison including PPA see commercial solar finance and finance options. For the underlying business case see are commercial solar panels worth it and solar panel ROI.
Business rates and solar — common questions
Are solar panels exempt from business rates in 2026?
Yes for most commercial installations. The Valuation Office Agency exempts rooftop solar PV from business rates valuation when the system is owned by the rate-payer of the same hereditament (the rateable property) and the electricity is consumed predominantly on site. The exemption was introduced in 2017, originally to 2025, then extended to 2035 in the 2022 Spring Statement. It saves UK businesses around 50-200 pounds per kW per year in avoided rates uplift on a system that would otherwise increase the rateable value.
Does my installation automatically qualify for the exemption?
Most rooftop commercial PV qualifies automatically when used predominantly for self-consumption. Three categories that do NOT qualify: (1) export-only systems where electricity is sold to the grid not consumed on site, (2) ground-mounted systems on land that is rated separately from the building, (3) systems owned by a third party (PPA installations) where the host site is not the system owner. For PPA structures the third party owner is the rate-payer for the system and may face a separate rateable value charge — though this is in practice rare because the PPA provider typically exits the rate-payer position.
How do I claim the business rates exemption?
Most local authorities apply the exemption automatically when notified of the install via the post-commissioning paperwork your installer should submit. Best practice: at commissioning, write to the local authority Valuation Office Agency contact (or the council business rates department where they handle the relationship) confirming the install date, capacity, owner of the system, and confirmation that electricity is consumed predominantly on site. Provide a copy of the G98 or G99 commissioning paperwork as evidence. The exemption is then applied to the rating list with no rateable value uplift for the PV.
What happens if my solar system exports more than it uses?
The VOA test for exemption is "consumed predominantly on site." Predominantly means more than 50 percent — so a system with 60 percent self-consumption and 40 percent export qualifies; one with 30 percent self-consumption and 70 percent export does not. In practice, very few commercial installs sit on the export-heavy side of this line because system sizing typically targets 70 to 90 percent self-consumption. For oversized systems or sites with declining demand the test should be reviewed annually — the exemption can be lost if the consumption pattern shifts materially.
How does this work in Scotland and Wales?
Scotland and Wales have their own business rates regimes (non-domestic rates and Welsh business rates respectively) but both have similar exemptions for rooftop solar consumed on site. Scottish Assessors apply a similar predominant-self-consumption test to the English VOA. Welsh local authorities follow Welsh Government guidance which mirrors the VOA position. Northern Ireland operates separately with rates devolved to the Department of Finance — contact NI Land and Property Services for the equivalent treatment. In all four nations, rooftop solar with predominant self-consumption is exempt from business rates.
Does the exemption apply to multi-tenant buildings?
Yes but with complications. In a multi-let building (e.g. a high-street parade with multiple shops or an office block with multiple tenants), each tenant is the rate-payer for their own hereditament. Solar PV on the common roof typically belongs to the landlord, not the tenants, and is consumed by either landlord-paid common-area electricity (lifts, lighting, air handling) or by tenants under a private wire arrangement. The rates exemption applies where the system serves the same hereditament as its owner. Practical solution: most multi-let landlord-owned installs serve common-area only, qualifying for exemption on the common-area hereditament; tenant supply requires a private-wire commercial agreement.
What if my building rateable value is reviewed during the exemption period?
Under the 2017 Rating List, the next general revaluation is in 2026 with effect from April 2027. Rateable values are recalculated based on rental evidence and physical attributes of the property. The solar PV exemption is preserved through revaluations — the exempt PV does not feed into the rateable value calculation. Confirm this is reflected in the 2027 list by checking your rateable value entry on the VOA portal and challenging any incorrect uplift attributable to the PV asset.