Taxes on commercial on-site solar power installations in the UK could rise next year by as much as eight times, the national Solar Trade Association (STA) said this week.

The trade group is calling for MPs’ intervention to avoid what it says could be a ‘crippling tax hike’ from April 2017 following a routine governmental review of business tax rates.  

The review will look at how business assets are valued, the income they generate and the evolution of costs over the past five to seven years. The STA says solar photovoltaic (PV) systems ‘present a particular challenge’ as they are CAPEX-heavy and have seen dramatic drops in both costs and subsidies in recent years.

‘The issue is that the “rateable value” that will come into force for rooftop solar as of next year bears little relation to the revenue generated by the installations but is instead based on fixed assumptions about capital costs of installation,’ the STA said.

While businesses with solar systems installed for self-consumption could see a tax hike of six to eight times their current rate, residential solar installations will not be affected. Public authorities, schools and community buildings are at risk, the STA said, although exemptions exist for some agricultural buildings and small businesses.  

Paul Barwell (pictured), CEO of the STA, said: ‘This is a huge increase in the running costs of a rooftop solar installation that will affect both existing and new projects. In some cases, it would actually send installations into negative returns: you would be spending more on the system in tax and maintenance than you would be getting back from the sale of the power and the feed-in tariff support.

‘We therefore need ministers to step in as soon as possible. The system needs to recognize that solar is a unique technology with both costs and revenues having come down over the last five years,’ he added.