Capital Allowances on Caravan Park Solar: AIA, Business Rates and VAT

The biggest objection holiday park owners raise is not whether solar works, it is that peak season is when the income arrives and the install seems to eat into reserves at the wrong moment. The good news is that solar panels for caravan parks are rarely funded from cash, and a stack of tax reliefs, export income and funding routes does most of the heavy lifting. This guide walks through what is available in 2026, who qualifies and how the pieces fit together. The figures are illustrative and depend on your park, your tax position and your tariff, so treat them as a guide rather than a promise.

The foundation: 100% Annual Investment Allowance

For most parks the single most valuable item is not a grant at all, it is a tax allowance. The panels, inverters, mounting and battery storage all count as plant and machinery, so up to the £1m annual cap the 100% Annual Investment Allowance lets a park business set the entire cost against year-one taxable profit. For a limited company that returns as much as a quarter of the project value in tax in the first year, and the position is broadly comparable for sole-trader and partnership parks under self-assessment.

There is a subtlety worth getting right. Solar is classed as a special-rate asset, which means it is excluded from full expensing, the headline relief many businesses now use. That sometimes leads owners to assume solar gets a worse deal. It does not: the 100% AIA still relieves it in full, and because a single-park install almost always lands inside the £1m cap, most parks get the whole cost against year-one profit anyway. Above the cap, the 50% First Year Allowance applies to the balance, with the remaining 50% drawn down via writing-down allowances at 6%, which is mainly relevant to groups deploying more than £1m of solar in a single tax year. The detail sits with HMRC under capital allowances, and your accountant should confirm your specific position.

Income from the grid: the Smart Export Guarantee

A holiday park exports more than most businesses, because the quiet October to March months see low occupancy while the panels keep generating. The Smart Export Guarantee is the mechanism that pays you for that surplus. Licensed suppliers that Ofgem requires to offer the Smart Export Guarantee must pay for exported power from eligible generators up to 5 MW. Rates are set by each supplier and change often: in early October 2026 the better open fixed rates were around 12-13p per kWh and small suppliers paid 3-6p, so compare live offers.

SEG matters more for a park than for a year-round business precisely because of the seasonal pattern. The power you cannot use in the off-season is not wasted, it earns income on electricity you would never otherwise have consumed. Because each supplier sets its own SEG rate, it is genuinely worth shopping around rather than defaulting to your incumbent.

Funding guest EV charging: the OZEV Workplace Charging Scheme

Guest EV charging has moved from a nice-to-have to an expectation for many parks. The challenge is that grid-supplied charging is expensive and can overload ageing site infrastructure. Pairing chargepoints with on-site solar solves both problems, because daytime guest charging absorbs solar generation at close to 100% self-consumption, and battery storage lets you charge cars from stored solar into the evening peak without straining your DNO supply.

The Workplace Charging Scheme from OZEV can contribute toward the cost of installing EV chargepoints, which is a natural fit for a park because daytime guest charging absorbs solar at close to full self-consumption. The grant rate, the cap per socket and per applicant, and how long the scheme stays open all change over time, so check the current OZEV guidance before you apply (it is generally open to UK businesses and charities, including holiday parks, that use an authorised installer and approved chargepoints). The application is normally handled as part of the project, with the PV, the battery and the charging infrastructure designed as one system.

Above the cap: the 50% First Year Allowance

For multi-park groups whose qualifying spend exceeds the £1m AIA cap in a single tax year, the 50% First Year Allowance covers the balance. Half the qualifying spend is deducted in year one, with the remaining half written down at 6% per year thereafter. This is the relief that makes a phased group roll-out of more than £1m of solar tax-efficient, and it is normally modelled alongside the group’s wider capital planning.

Green Tourism: a certification, not a grant

Green Tourism accreditation is not funding, but on-site solar can count as evidence in an application. Green Tourism is a certification scheme, not a grant; on-site solar can count as evidence in an application, so check the scheme's current criteria. Eco-conscious guests, especially in the glamping and premium-lodge segments, actively choose greener parks, and the award influences both OTA visibility and direct bookings. Fees are set by the scheme; check its current price list.

One thing to be clear about: VAT

There is a common misconception that solar attracts 0% VAT. That relief currently applies to residential and charity buildings only (until 31 March 2027). It does not apply to commercial holiday park operations, so a park’s solar install carries standard-rate VAT, recoverable in the normal way if the business is VAT-registered. Park Homes used as genuine residential dwellings on a mixed site can be a different matter, but the trading park itself is a commercial install. It is worth flagging this early so the numbers in your business case are right from the start.

How the funding routes fit together

Most parks do not pick one option, they stack several. A typical structure pairs zero-capital finance with the tax relief and export income:

A power purchase agreement delivers day-one savings against your current tariff with no capital outlay, which suits a business whose cash flow is concentrated in six months of the year. Asset finance, by contrast, spreads the cost over 7 to 15 years and is typically positive against EBITDA from the first year, while leaving you owning the system outright at the end. On top of whichever finance route you choose, the AIA reduces your tax bill, the SEG pays for off-season export, and the OZEV scheme offsets any EV charging you add. For a group, a single finance framework lets every park draw on the same facility while each site is still assessed individually for roof, grid and planning.

What to do next

The right combination depends on whether you own or finance, your tax position, and whether guest EV charging is on the roadmap, which is exactly why it should be modelled per park rather than taken from a standard package. To explore the numbers, read the full grants and funding guide, see how the underlying capital cost breaks down in the cost guide, or run your own figures through the savings calculator. You can also see how the funding stack applies to a phased deployment across a holiday park group. When you are ready, send an enquiry and we reply by email.