Shining a light on solar panel subsidies

3rd November 2014

In the rush to get solar panels in place and secure available subsidies before next year's April deadline, British farmers need to ensure that other reliefs are not lost in the process. 

Midlands law firm Higgs & Sons is therefore urging farmers to undertake a thorough review of their business, in order to ensure that any income received from solar panels does not impact on the  Business Property Relief (BPR) received on the whole enterprise.

Current estimates suggest there are 250 solar farms in this country, with many, many more in the planning. That equals a large number of farms that have fundamentally changed in nature.

Lisa Whitehouse, a private client solicitor with Higgs & Sons, comments: "For Agricultural Property Relief (APR) to apply, land needs to be agricultural in nature and must have been farmed for two years.

It has been suggested that grazing sheep under and around solar panels - so called 'solar sheep' - is still classed as agricultural in purpose. However, even in the unlikely event that this is accepted by HMRC, APR will only be available on the agricultural value of the land.

That leaves the premium value of the solar panels subject to inheritance tax - unless a successful claim for Business Property Relief (BPR) in relation to the farming business as a whole is available.

Lisa points out that in order for BPR to apply, the farming business must not consist wholly or mainly of holding investments. 

Put simply, any 'let property' (that is, land with solar panels) will not qualify for BPR.

Case law indicates that HMRC will look at the overall context of the farm business and consider the balance of the following factors between the trading and investment sides:

  • the capital employed (the value of the assets used in the business);
  • the time spent by the directors and employees;
  • how turnover is split between trading and investment elements;
  • the amount of profit arising from the investment and non investment sides of the business. 

Lisa said: "After looking at all of these factors, HMRC will stand back and consider in the round, whether they believe that the farming operation consists wholly or mainly of holding investments.

"If the investment side of the business outweighs the trading side then BPR would be lost on the whole farm. Alternatively, if only a minority of the farm consists wholly or mainly of holding investments then BPR will apply to the whole enterprise."

The rural services team at Higgs & Sons encompasses specialists in tax planning, business structures, property acquisition and regulatory issues. They offer the agricultural and rural community a unified approach to the challenges and opportunities faced by a modern farm and draw expertise from all areas of the firm to ensure a seamless service from start to finish.

Higgs & Sons is based in the heart of the Black Country at the Waterfront Business Park in Brierley Hill. The growing team now boasts 100 plus specialist lawyers available to support clients in a comprehensive range of business and private sectors.

For more information on our agricultural services please contact us on 0845 111 5050.


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Brierley Hill
West Midlands, DY5 1LX

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