Solar for charity-owned churches, chapels and halls: the rules that decide it

Charities own some of the most solar-suitable buildings in the country and some of the least straightforward rules for putting panels on them. A church, a village or church hall, a community centre, a scout hut, a hospice, a sports club pavilion, a day centre — large simple roofs, daytime occupancy, and electricity bought at commercial rates with no domestic price cap to soften them. What makes charity solar different is not the engineering. It is that a charity cannot simply decide to lease its roof, that the VAT treatment turns on how the building is used rather than what it is, and that trustees carry duties a commercial owner does not.

This page sets out the four things that actually decide whether a charity solar project goes ahead: the VAT position, the ownership and leasing rules, the consent route, and the grid connection. It is written for trustees, treasurers and property committees, and it is not a sales page — we publish guidance and introduce enquiries to installers; we install nothing ourselves.

The VAT position is the largest single saving, and it has a deadline

For most charities the biggest number on the page is not a grant. It is VAT.

Installing solar panels is an installation of energy-saving materials. Since 1 February 2024 that work has been zero-rated for VAT not only in residential accommodation but also in buildings intended for use solely for a relevant charitable purpose. The relief is time-limited: it runs to 31 March 2027, after which the rate is due to revert to 5%.

On a £40,000 installation, the difference between 0% and 20% is £8,000 — more than most charities will win from any single grant, with no application form, no competitive round and no reporting conditions. It is simply the rate the installer charges.

Two definitions decide whether you get it.

What "relevant charitable purpose" means

HMRC's guidance defines use for a relevant charitable purpose as use by a charity in either or both of two ways: otherwise than in the course or furtherance of a business, or as a village hall or similarly in providing social or recreational facilities for a local community.

That second limb is broader than it sounds, and charities routinely assume it does not apply to them when it does. It is not restricted to buildings in villages, and it is not restricted to buildings called halls. A community centre on an urban estate providing social and recreational facilities to the people around it can qualify on the same basis as a rural village hall.

What "solely" means in practice — the 95% test

"Solely" sounds absolute, and this is where charity projects most often come unstuck. In practice HMRC treats a building as used solely for a relevant charitable purpose where at least 95% of its use is for that purpose, exercising discretion to ignore a small, incidental amount of business use.

So a hall that hosts a paid fitness class on a Tuesday evening is very unlikely to lose the relief. A hall with a commercial nursery on a full-time lease, a trading café, or a regular programme of paid private hire may well cross the line. The test is applied to the building, not the charity, so a charity can hold one building that qualifies and another that does not.

What this means procedurally: the installer has to be satisfied the building qualifies before charging 0%. HMRC expects installers to take reasonable steps to establish that the customer will use the building for a relevant charitable purpose and to retain the documentation. Expect to confirm the position in writing, and expect a careful installer to ask about lettings. An installer who charges 0% without asking a single question about how the building is used has not protected either of you.

If the building does not qualify

Where the 95% test fails, the zero rate does not apply to the whole building simply because most of it is charitable. Take advice before assuming a rate, particularly if a significant part of the building is commercially let. It is sometimes possible to restructure which building the work is done on — putting the array on the hall rather than the let annexe, for example — but that is a decision to make before the quote, not after the invoice. Note too that the relief has an end date: the 0% window closes on 31 March 2027, which matters if the project is likely to slip.

Why the closure of the Listed Places of Worship scheme changed less than it appears

The Listed Places of Worship Grant Scheme, which reimbursed the VAT on works to listed places of worship, closed to new and returning applicants on 31 March 2026. Its 2025–26 budget was fully allocated, outstanding decisions were issued by 15 April 2026, and the government confirmed there would be no further funding rounds. In England it is replaced by the Places of Worship Renewal Fund — £92 million over four years, funded by DCMS and delivered by Historic England — but that programme is aimed at the repair and maintenance of buildings most at need, and its published criteria do not mention energy efficiency, decarbonisation or solar. Do not assume a PV project is eligible.

For solar specifically, the closure matters less than the headlines suggested, because a charity that qualifies for the zero rate never pays the VAT in the first place and so has nothing to reclaim. If you are working from guidance written before 2024 — and a great deal of church and charity solar guidance still is — you may have a VAT rebate in your budget twice, or be counting on a scheme that no longer exists. Our guide to VAT on church and charity solar sets the current position out in full.

Who owns the panels: grants, leases and the Charities Act

The second decision is who owns the system, and it is the one most likely to stop a project that has already been agreed in principle.

There are broadly three routes. The charity buys the system outright, usually with grant support. A third party installs and owns it and sells the charity the electricity under a power purchase agreement. Or a community energy society owns the panels and leases the roof from the charity. Each has a different consequence for the charity.

Ownership and grant eligibility

Most grant programmes fund assets the charity will own. Where that is a condition, a third-party-owned PPA will usually disqualify the project, because the charity is not buying an asset — it is buying electricity. If you intend to apply for capital grant funding, settle the ownership model first: it is a great deal easier than unwinding a signed PPA to satisfy a funder. Our guide to power purchase agreements compares the models, and the grants and funding guide sets out what is currently open.

Leasing the roof is a disposal of charity land

If a separate body is to own the panels and lease your roof, that lease is a disposition of charity land. For charities in England and Wales, section 117 of the Charities Act 2011 means it cannot go ahead without an order of the court or the Charity Commission — unless the trustees follow the statutory route instead. That route has two parts.

First, the other party must not be a connected person. Under section 118 a connected person includes a charity trustee, their close family, the charity's officers and employees, and any company or institution those people control or hold a substantial interest in. This is the trap for community buildings, because hall committees and local energy groups often share members. If your trustees also run the society that would take the lease, the statutory route is closed to you and you will need a Commission order. Establish this before heads of terms are drafted, not after.

Second, the trustees must take and consider the right advice. For a lease of more than seven years, section 119 requires written advice from a designated adviser. Note that the pool of people who can give that advice is wider than it used to be: the Charities Act 2022 replaced the old "qualified surveyor" requirement, so as well as RICS members, fellows of the Central Association of Agricultural Valuers and fellows of NAEA Propertymark can advise, and a suitably qualified trustee or employee of the charity can now give the advice themselves. The 2022 Act also removed the requirement to advertise the disposition as the adviser directed. For a lease of seven years or less, section 120 applies a lighter requirement.

A lease intended to last the working life of a solar array will normally run well beyond seven years, so plan for the section 119 route — the step-by-step order trustees should work through sets out where each check falls, including the clauses in the lease itself that outlast everyone signing it. Scotland and Northern Ireland have their own charity land regimes; do not assume the English and Welsh sections apply.

Consent: when a charity building needs planning permission

Most solar on an unlisted charity building is permitted development, which means no planning application. The relevant right for non-domestic buildings is Class J of Part 14, Schedule 2 to the General Permitted Development Order 2015. The main limits are dimensional: on a pitched roof the equipment must not protrude more than 0.2 metres beyond the plane of the roof slope, on a flat roof it must not exceed 1 metre above the highest part of the roof (excluding any chimney), and it must not be within 1 metre of the external edge of the roof.

Class J does not apply to a listed building, a scheduled monument, or land within their curtilage, and on land designated under article 2(3) — conservation areas, National Parks, AONBs, the Broads and World Heritage Sites — it does not permit equipment on a wall. There are conditions attached, too: the siting must minimise the effect on the building's external appearance and on the amenity of the area so far as practicable, and the equipment must be removed as soon as reasonably practicable when no longer needed. Where the installation is not microgeneration, prior approval is required from the local planning authority for siting and appearance before development begins. The former capacity cap in Class J was removed on 21 December 2023.

If the building is listed, you are in a different process. Listed building consent is required for a listed charity building — with one important exception: Church of England buildings in use as places of worship are subject to the faculty jurisdiction instead, through the diocesan advisory committee and chancellor, rather than to listed building consent. Our guide to solar on listed buildings and the listed church installation page cover both routes, and if you are not sure which one your building is on, the six denominations that hold the ecclesiastical exemption is the shortest way to find out. A hall inside the curtilage of a listed church can be caught even if the hall itself is not separately listed, which is a common and expensive surprise; check the curtilage position early.

Grid connection: G98 and G99

Every grid-connected installation needs the distribution network operator's agreement, and which process applies is set by size, not by building type.

Small installations connect under G98, which is a connect-and-notify process: the installer commissions the system and notifies the DNO afterwards. The G98 threshold is 16 A per phase, which is about 3.68 kW per phase — so roughly 3.68 kW on a single-phase supply and about 11 kW across a three-phase supply. Anything above that falls under G99, which is an application requiring the DNO's approval before the work is done.

This matters to project timetables far more than most trustees expect. A G99 application can take weeks, and in constrained parts of the network the DNO may offer a connection with an export limit, or require reinforcement at the charity's cost. Two practical consequences: find out whether your building is single or three-phase before you size anything, and get the G99 application in early, because a signed contract and a funded grant do not help if the connection offer has not arrived. Where export is constrained, an export-limited system sized to on-site consumption often delivers better economics than a larger array that cannot export.

Income from exported electricity

Electricity the charity does not use can be exported and paid for under the Smart Export Guarantee. Licensed electricity suppliers above a certain size must offer at least one export tariff, and the scheme covers installations up to 5 MW, so charity-scale systems are comfortably inside it. Tariffs are set by suppliers and vary widely, and the export tariff is not tied to your import supplier, so it is worth shopping for.

The practical gateway is certification: SEG registration requires the installation to be certified under MCS or an equivalent scheme. That is a reason to check an installer's certification on the MCS register yourself rather than relying on a logo, and it is worth doing before signing rather than at handover.

Be careful with the arithmetic here. Export income is almost always the smallest of the three benefits, behind avoided electricity purchase and the VAT saving. For most charity buildings, the money is in using the generation on site, which is why occupancy patterns matter more than roof area.

Business rates

Charities occupying non-domestic property generally get 80% mandatory rate relief, with discretion for the billing authority to top that up. Separately, in England, on-site renewable plant and machinery is excluded from the rateable value under an exemption that runs to 2035, so adding solar should not increase a charity's rateable value. Rating is administered separately in Scotland, Wales and Northern Ireland, and rating questions turn on the specific entry in the list — confirm the position for your own property with the Valuation Office Agency or the devolved equivalent rather than assuming it from a guide.

The order to do this in

Charity solar projects fail on sequence more often than on economics. A workable order:

1. Establish the VAT position — is the building used at least 95% for a relevant charitable purpose? This changes the budget by up to 20% and takes one honest conversation about lettings.
2. Decide the ownership model — purchase, PPA or roof lease — because it determines grant eligibility and whether charity land rules apply at all.
3. If a lease is involved, check connected persons under section 118 first, then plan for section 119 advice.
4. Check the consent route — Class J permitted development, prior approval, listed building consent, or faculty jurisdiction — and the curtilage position for halls near listed churches.
5. Establish the supply and start the DNO process — single or three phase, G98 or G99, and any export limit.
6. Then get quotes, check the VAT rate on them, and check the installer's certification.

Halls and community buildings are usually the best place for a charity to start, because utilisation is high and the consent route is simpler than on a place of worship. If that is your position, the church and parish hall guide and the village and community hall guide go into the sizing and funding detail. If the building is a place of worship, start with the funding routes that are currently open.