Asset finance and hire purchase for commercial solar
Spread the capex over 3-7 years, retain full ownership from day one, and still claim Full Expensing or AIA on the entire system cost. The most popular UK commercial solar finance route in 2026 for projects under £500k.
What is asset finance for solar?
Asset finance (hire purchase / HP) is debt-style finance where a specialist lender pays your installer in full for the solar system; you repay the lender over a fixed term (typically 3-7 years) at a fixed interest rate. Critically — and unlike an operating lease — you're treated as the legal and tax owner of the asset from day one. That means you can claim AIA or Full Expensing on the entire system cost in year one, even though you're paying for the asset over time.
For most tax-paying limited companies, this combination — debt finance + full first-year tax relief — produces the best post-tax economics of any solar finance route. The Full Expensing benefit typically arrives in year one (offsetting the early monthly payments), and the energy savings over 25 years dwarf the interest cost.
Typical UK 2026 terms
| Term | Typical range |
|---|---|
| Loan term | 3-7 years (5 most common) |
| APR (2026) | 7.5-11% depending on credit |
| Deposit | 0-20% (typically 10%) |
| Personal guarantee | Often required for SMEs under £5m turnover |
| Maximum loan | £2m typically; larger by negotiation |
| Approval time | 5-10 working days |
| Tax treatment | You claim AIA or Full Expensing year one |
Worked example: 100kWp HP-funded project for a limited company
- System cost: £85,000 (excl. VAT)
- HP funded: 100% (£85,000)
- Interest rate: 8.5% over 5 years
- Monthly payment: £1,742
- Total interest: £19,520 over 5 years
- Full Expensing year-one tax saving: £21,250 (25% of £85,000)
- Year-one cash effect: -£20,904 HP payments + £21,250 tax saving + £15,000 energy savings = +£15,346 positive
- Net positive cashflow from year one. Project pays for itself entirely from operating savings.
UK commercial solar HP providers (2026)
Major UK commercial solar HP providers include Lombard (NatWest Group), Aldermore Asset Finance, Praetura Asset Finance, Time Finance, Hampshire Trust Bank, Close Brothers, Investec Asset Finance, and Liberty Leasing. Specialist green-finance lenders (Triodos Bank, Charity Bank for charities) offer reduced rates for qualifying borrowers. For larger projects (£500k+), bank-led syndicated debt or specialist project finance is typically more cost-effective than asset finance.
Asset finance & HP FAQs
What is asset finance for solar panels?
Asset finance (often called hire purchase, HP, or lease purchase) is a debt-style finance product where a lender pays your installer for the solar system; you pay the lender back over 3-7 years through fixed monthly payments. You're treated as the owner from day one for tax purposes — so you can claim AIA or Full Expensing immediately.
Can I claim Full Expensing on hire-purchase solar?
Yes — provided the agreement is structured as a hire purchase (not a true operating lease) and the asset is new, you're treated as the buyer from day one and can claim 100% Full Expensing in year one. This is a major advantage of HP / asset finance over operating lease.
What rate of interest do solar HP agreements run at?
UK commercial solar hire purchase agreements typically run at 7.5-11% APR in 2026 — premium to base rates due to credit risk and the specialist nature of the asset. Larger borrowers with strong credit profiles can achieve 6.5-8%. Rates have softened in 2026 as the green finance market matures.
What deposit is required?
Typical deposits are 10-20% of the system cost. Some providers will fund 100% (zero deposit) for strong credit profiles or with parent company guarantees.
How does asset finance compare to a bank loan?
Asset finance is typically faster and easier than a bank term loan — decision in 5-10 working days vs 4-8 weeks. Rates are higher than secured bank lending but lower than unsecured. The asset itself secures the finance, so personal guarantees are often (but not always) avoided.
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