Business Rates and Solar for Care Homes

Pre-April 2023, installing commercial solar could trigger a business rates uplift on the underlying premises — sometimes adding £10–£30 per installed kilowatt per year in rates liability. Spring Budget 2023 confirmed 100% business rates exemption for eligible commercial solar PV up to 5 MW, in force until 31 March 2035. For care homes, this removes a material historic cost barrier.

What changed in 2023

The Spring Budget 2023 measures included a package of low-carbon technology business rates relief. Before April 2023, solar PV could increase the rateable value of a commercial property — particularly where the installation was substantial relative to the building. After April 2023, the Valuation Office Agency (VOA) treats eligible solar PV as exempt from business rates calculation up to 5 MW capacity. The exemption is in force until 31 March 2035, with the Government committed to review extension before that date.

The change matters for care homes because business rates on UK care home premises are typically £15,000–£80,000 per year. A 10–15% uplift on rateable value pre-2023 could have added £2,000–£12,000 per year — meaningfully eroding payback.

Who qualifies for the exemption

The exemption covers any commercial solar PV installation up to 5 MW capacity in England, Wales, and (with separate equivalent provisions) Scotland and Northern Ireland. This easily covers every care home solar install we've ever delivered — the largest care village solar installations top out around 800 kWp.

The exemption is automatic — there's no application form. The VOA should classify your PV as exempt plant on installation. We provide the documentation needed if the local billing authority queries the exemption status.

How to confirm exemption with your billing authority

In our experience, the system usually works correctly — the install happens, the VOA registers the installation, and the rateable value of the premises is unaffected. Occasionally a local billing authority misses the update or applies an old assessment. If your business rates bill increases after a solar install, the resolution path is:

1. Request the assessment detail from your billing authority. Most councils provide this within 14 days.
2. Check whether solar PV is included in the rateable assessment. If yes, the assessment is wrong post-April 2023.
3. Write to the Valuation Office Agency. Reference Spring Budget 2023 and the 5 MW exemption. Request an updated assessment removing the PV.
4. Provide installation documentation. System capacity in kWp (under 5 MW), MCS certification, commissioning date.
5. VOA typically issues a revised assessment within 4–8 weeks. The billing authority then issues an updated rates demand reflecting the exemption.

We provide the documentation needed if this becomes necessary. In the substantial majority of installs we deliver, no intervention is required.

Battery storage and EV charging

The exemption covers solar PV up to 5 MW. Battery storage receives equivalent treatment under the 2023 budget changes. EV charging infrastructure is treated separately — generally not subject to business rates uplift on the underlying premises, but with some local variation.

Beyond 2035

The current exemption is in force until 31 March 2035. The Government committed in the 2023 Budget announcement to review extension before that date. The political consensus on supporting low-carbon technology suggests extension is likely — but it's not guaranteed. For new installations in 2026, the 9 years of guaranteed exemption (to March 2035) covers the typical 5–6 year payback comfortably; any rates liability arising after 2035 would not affect the recovery of the original capex.

Why this matters for care home valuation

RICS guidance on commercial property valuation increasingly recognises solar PV as adding value to the underlying asset. Pre-2023, this was partially offset by the business rates uplift; post-2023, the value uplift is uncomplicated by additional rates liability. Care home property valuation typically reflects 4–8% uplift for installed commercial solar at sale, depending on system size relative to premises.

Stacking the exemption with other reliefs

The business rates exemption stacks with all other relief routes:

• Annual Investment Allowance (AIA) on capex
• 50% First Year Allowance on special-rate pool
• Smart Export Guarantee (SEG) on exported electricity
• SHDF Wave 2.2 match funding (for RP-owned schemes)
• LA commissioning premia (where the LA operates a sustainability uplift)

For the full picture of how these stack, see grants and funding for care home solar.

Care homes and the wider business rates position

Independent of solar, care home business rates have been an active policy area. The Care Provider Alliance has been campaigning for years on the rates position of regulated care providers — particularly the disparity between care homes (which pay full business rates) and similar healthcare uses (NHS facilities, hospices) which often benefit from charitable or NHS exemptions.

For private-sector care homes, the standard position is: full business rates liability on premises, small business rates relief where eligible (for some smaller homes under £15,000 rateable value), no NHS-style exemption. The solar rates exemption is a useful but narrow exception to this — it covers only the PV plant, not the home itself.

Some care homes have successfully challenged their rateable assessment through the VOA's check-challenge-appeal process. Common grounds: incorrect categorisation (e.g. residential vs nursing affects valuation), incorrect floor area, errors in valuation comparators. Worth reviewing if your assessment seems high — but the solar exemption sits alongside rather than replacing this work.

Charity-owned care homes and rates

Charity-owned care homes (some hospices, some Methodist Homes Association / MHA properties, charity-run residential homes) typically benefit from 80% mandatory rates relief and may receive additional discretionary relief from the local billing authority — bringing the effective rates liability to 0–20% of the standard amount. The solar exemption stacks on top of this: the underlying premises retain their charitable rates relief, and the solar plant adds zero rates burden.

Scotland, Wales and Northern Ireland

The 100% rates exemption applies in England under Spring Budget 2023 measures. Scotland, Wales, and Northern Ireland operate separate non-domestic rates systems with their own equivalent provisions:

• Scotland: The Scottish Government introduced equivalent relief from April 2023 under the Non-Domestic Rates (Scotland) Act, covering on-site solar up to 5 MW.
• Wales: The Welsh Government applies an equivalent treatment via the Non-Domestic Rating (Renewable Energy Generation) regulations, with broadly the same scope.
• Northern Ireland: Northern Ireland's Land & Property Services applies its own valuation rules; solar PV is currently treated under the Industrial Derating provisions where applicable. Consult LPS directly for individual sites.

Mixed-use sites — care + commercial

Some larger care home estates include mixed uses on the site — care plus restaurant, hairdressing salon, day centre rental, EV charging revenue. The business rates treatment may treat these as separate hereditaments. The solar exemption applies to the entire solar installation regardless of which part of the site consumes its output — but the underlying rates liability across the mixed uses requires careful valuation. We coordinate with your rating surveyor where mixed-use complexity arises.

What we provide for the rates position

As part of standard handover, we provide:

• System capacity confirmation in kWp (well below the 5 MW threshold for every care home install)
• MCS certification confirming the system as eligible
• Commissioning date documentation
• A briefing note for your billing authority confirming the Spring Budget 2023 exemption applies
• Template letter for any subsequent challenge if the billing authority misclassifies

The documentation pack is part of standard handover. We retain a copy on file in case any future query arises during the 9-year exemption window to March 2035.

Historic context — what care home operators paid before April 2023

To understand the value of the current exemption, it helps to know what care home operators paid before April 2023. Pre-exemption, a commercial PV install would typically trigger one of three rateable-value treatments:

• Plant-and-machinery uplift on the underlying premises. The Valuation Office Agency would re-assess the property's rateable value to reflect the additional plant. For a typical 50 kWp install on a 50-bed care home, this added £600–£1,800/year of additional rates liability over the previous assessment.
• Separate hereditament treatment. Where the solar installation was large or operationally separable (e.g. ground-mount field or substantial canopy), the VOA could treat it as a separate hereditament with its own rateable value. For a 200+ kWp install, this could add £3,000–£10,000/year.
• Capital-value uplift trigger. Even where the VOA didn't immediately re-assess, an install would typically trigger a review at the next general revaluation cycle (held every 5 years pre-2023; every 3 years from 2023 onwards). Many operators discovered the rates uplift only at the next revaluation, sometimes 4 years after install.

The April 2023 exemption eliminated all three of these treatments for eligible installations. Existing pre-2023 installs continue to benefit from any rateable adjustments made under the new regime if formally reviewed.

Pre-2023 installations — claiming retrospective relief

For care home operators with solar PV installed before April 2023 who are paying business rates uplift on the installation, retrospective relief may be claimable. The mechanism varies by region:

• England: Apply to the VOA to "check" the current rateable value via the standard CCA (check, challenge, appeal) process. Reference Spring Budget 2023. Most billing authorities have processed these adjustments without issue since 2023.
• Scotland: Apply to the Scottish Assessors Association equivalent process. The 2023 revaluation cycle should have already factored the exemption in.
• Wales: Apply to the VOA Wales. Equivalent process.
• Northern Ireland: Apply to LPS. The treatment under Industrial Derating provisions varies.

Retrospective relief is typically backdated to April 2023. For an install with a £1,200/year rates uplift, that's around £3,600 of refunded rates by mid-2026 if not already adjusted.

Impact on care home property valuation

RICS guidance on commercial property valuation increasingly recognises installed solar PV as a value-additive asset. Pre-2023, the value uplift was partially offset by the business rates uplift; post-2023, the value uplift is unencumbered.

Typical RICS valuation uplifts for installed commercial solar on UK care home property:

• Small system (under 30 kWp, residential care home): 2-4% premises valuation uplift
• Medium system (30-100 kWp, nursing/dementia home): 4-6% uplift
• Large system (100-500 kWp, extra-care or retirement village): 5-8% uplift
• Very large system (500+ kWp, care village): 6-10% uplift

For care home operators considering a future sale within 10-15 years of install, the property valuation uplift typically exceeds the residual asset value of the solar system itself — making solar a meaningful value-creation move for the underlying real estate, not just an operational cost saving.

Solar PV and the Uniform Business Rate (UBR)

UK business rates are calculated as Rateable Value × UBR (small business multiplier 49.9p in 2024-25, standard multiplier 51.2p). The UBR varies annually with inflation indexation. The solar exemption applies before the UBR calculation — i.e., solar plant is removed from rateable value entirely, meaning future UBR rises don't affect the solar component.

This is structurally favourable. Most other capital improvements to commercial property (extensions, fit-outs, refurbishment) attract rateable value uplifts that compound with UBR inflation over time. Solar plant is uniquely exempt.

Sector context — comparison with other sectors

The 100% solar PV business rates exemption applies across all commercial sectors equally. But the relative benefit to care homes is particularly favourable for three reasons:

• Care homes hold rates liability. Unlike NHS hospitals (which are exempt from business rates entirely) or many charity-run hospices (which benefit from 80% mandatory plus 20% discretionary relief), private and group care homes typically pay full business rates on premises. The solar exemption is therefore a marginal saving on a real liability, rather than a marginal saving on a partially-exempt position.
• Care home premises are typically high-rateable-value per sqm. The combination of substantial floor area, fitted-out interior, and going-concern operational status results in higher per-sqm rateable values than office or retail premises. A solar installation that would have added 8-12% to rateable value at typical care home scale represents meaningful absolute saving.
• Operating margin pressure makes every cost line material. Care home operating margins of 25-35% on weekly fees of £900-£1,400 per bed mean fixed-cost reduction is unusually valuable. Every £1k of saved rates flows directly to operator margin.

Future policy risk and review

The exemption is currently in force to 31 March 2035. The Spring Budget 2023 announcement committed the Government to review extension before that date. Political consensus on supporting low-carbon technology investment suggests extension is the most likely outcome, but it's not guaranteed.

For care home operators commissioning solar in 2026-2030, the exemption guarantees 5-9 years of unencumbered business rates treatment — comfortably covering typical 4-6 year payback periods. Any post-2035 review outcome affects future rates liability only on remaining system life, not on the recovery of original capex.

Operators with very long-horizon (25+ year) planning should treat the exemption as a 9-year certainty plus a probability-weighted extension. The conservative modelling assumption is to factor a 1-2% annual rates liability resuming from April 2035 onwards on the solar plant's residual rateable value. This typically adds £200-£800/year to a 25-year cashflow model for a typical care home installation — material but not deal-breaking.