Think you can’t get tax relief on solar? Think again.

Recent updates to HMRC guidance have caused understandable confusion around solar panels, battery storage and salary sacrifice.

HMRC’s general position is that when an employer simply pays for solar panels or a home battery at an employee’s home, this normally creates a taxable Benefit-in-Kind. Even where an electric company car is involved, HMRC considers the connection between the renewable energy system and the vehicle too remote for the usual company car exemption to apply.

But that does not mean every salary sacrifice arrangement is treated in the same way. Perx gives employers access to HEVA’s specifically structured solar salary sacrifice scheme, which has received HMRC scheme clearance. This means eligible employees can pay for solar panels, battery storage and EV charging equipment through deductions from their gross salary, potentially reducing the Income Tax and National Insurance they pay. The important word is eligible. To access the tax advantages, the employee must have an electric vehicle. However, the EV does not need to be supplied through Perx or acquired at the same time as the home energy system. An employee can install solar panels or battery storage first, with the tax-relieved treatment applying once they later take an EV, subject to HEVA’s eligibility checks and scheme terms.

This is not a blanket tax exemption for all employer-funded solar installations. It is a specifically designed and HMRC-cleared arrangement, delivered through HEVA and available from Covase as part of Perx. So, can solar be offered through salary sacrifice? Under an ordinary arrangement, HMRC’s updated guidance says the equipment will normally be taxable. Through the correctly structured Perx and HEVA scheme, eligible EV drivers can still access valuable tax savings.

Want to explore solar, battery storage or EV charging as an employee benefit? Talk to Covase about Perx.

Tax treatment depends on individual eligibility and the terms of the scheme. Tax rules and personal circumstances can change. HMRC reference: Employment Income Manual EIM23900