Formula Used
How to Use
Enter every capital cost included in the solar project. Separate land and excluded expenses from depreciable equipment. Review the total before choosing incentives.
Choose a depreciation method and recovery period. Enter bonus depreciation using the applicable project assumption. Use custom percentages when required.
Add tax rates, energy production, financing, and operating costs. Include a disposal year when modelling an asset sale. Submit the form to compare scenarios.
Example Data
| Input | Example | Purpose |
|---|---|---|
| Gross project cost | £430,000 | Combines panels, installation, battery, inverter, and related expenses. |
| Investment tax credit | 30% | Models a configurable first-year project tax credit. |
| Bonus depreciation | 40% | Accelerates part of the adjusted basis into year one. |
| Combined tax rate | 27% | Estimates the cash value of allowed depreciation deductions. |
| Analysis period | 25 years | Measures long-term cash flow, payback, NPV, and IRR. |
Frequently Asked Questions
What is accelerated depreciation?
Accelerated depreciation moves more deductions into earlier years. Earlier deductions can improve near-term cash flow. Actual eligibility depends on local tax rules.
How is the depreciable basis calculated?
The calculator starts with eligible capital costs. It subtracts excluded costs, incentives, and basis reductions. Business use and ownership percentages are then applied.
Does a tax credit reduce depreciation basis?
Some tax systems require a basis adjustment. The calculator therefore includes a configurable reduction percentage. Confirm the correct treatment with a qualified adviser.
Can I use straight-line depreciation?
Yes. Select straight-line and choose the recovery period. The scenario table compares it with accelerated alternatives.
What does bonus depreciation do?
Bonus depreciation deducts a selected basis percentage immediately. The remaining basis follows the chosen regular method. Enter the rate that applies to your project.
How are tax savings estimated?
Allowed depreciation is multiplied by the combined tax rate. Income limits can restrict annual deductions. Optional carryforwards preserve unused amounts for later years.
Does the calculator include financing?
Yes. It supports cash purchases and amortising loans. Interest deductions, fees, equity contributions, and debt service affect project returns.
How does the calculator handle a sale?
Enter the sale year, proceeds, costs, and tax rates. The calculator estimates recapture and capital gains. It also deducts any remaining loan balance.
Why can IRR be unavailable?
IRR requires both negative and positive cash flows. Some projects never change cash-flow signs. NPV remains useful in those cases.
Is this calculator tax advice?
No. It provides planning estimates using user-entered assumptions. Tax laws and eligibility rules require professional verification.
Important Disclaimer
This calculator provides educational estimates only. It does not provide tax, legal, accounting, engineering, or investment advice. Verify all assumptions with qualified professionals before making decisions.