As a farmer, you may have been approached by Solar Developers to lease your land out for what seems like a highly attractive rate. However, leasing your land out for Solar Panels as opposed to investing in the Solar Panels yourself may not be as lucrative as it first seems…
So, should you lease your land to a Solar Developer or fund the PV Panels yourself through finance?
If you decide to lease your land to Solar Developers, you enjoy low (or no) installation and maintenance costs.
But when you do lease, you usually don’t have an option to buy. You also forfeit the ability to gain price advantage by selling the produced energy to the grid.
You also have to take into consideration how leasing your land affects APR (Agricultural Property Relief), BPR (Business Property Relief) and IHT (Inheritance Tax).
“Renting land for a solar farm is a commercial lease and is not an agricultural use, so Agricultural Property Relief from inheritance tax may be lost….
Because rental income is property income rather than farm trading income, it is also likely to give rise to an income or corporation tax liability.” – Farmers Weekly
Leasing your land out to Solar Developers isn’t always what it seems on the surface. However, it is worth seeking professional consultancy advice as to what is the best route for you.
Between 2010 – 2019, the cost of Solar PV globally dropped by a staggering 82% worldwide, according to a recent report by International Renewable Energy Agency (IRENA).
This makes it much more achievable for farmers to fund this themselves. Or, rather than taking a significant sum of money from your own funds, you can choose to finance the project and earn an income alongside.