0% VAT on solar panels, explained

What the relief is

In April 2022, the UK government cut VAT on the installation of qualifying energy-saving materials, including solar panels, from 5% to 0% for residential properties. It's a genuine saving of around £1,000-£3,000 on a typical install, depending on system size. The relief is currently legislated to run until 31 March 2027, after which VAT is due to return to 5%.

Why you won't see it as a discount

This is the part that confuses people: because the relief applies to the installation, VAT-registered installers simply quote you a price with 0% VAT applied. There's no rebate to claim afterwards and no form to fill in, the saving is already in the number you're given. That's why our calculator uses a price (~£1,700/kW) that already reflects 0% VAT, rather than adding VAT and then removing it.

What qualifies

• Solar panels (PV) installed on or near a residential property in Great Britain.
• Battery storage, from February 2024, batteries qualify for 0% VAT too, including when retrofitted on their own.
• Other energy-saving materials like heat pumps and insulation, under the same scheme.

A few things to note: the 0% rate applies to the supply and installation together by the installer, buying panels yourself to fit later may not qualify the same way. Northern Ireland has its own arrangements, so terms can differ there.

Is it the same as a grant?

Not quite. A grant hands you money; VAT relief just means you're not charged tax you'd otherwise pay. The effect on your wallet is similar, a lower upfront cost, but there's nothing to apply for. For lower-income households, means-tested help such as ECO4 and the Warm Homes Plan can go further, sometimes covering most or all of an install.

What it means for timing

With the 0% rate scheduled to end in March 2027, installing before then locks in the saving. That said, don't rush a bad decision to beat a deadline, a well-chosen system on a good SEG tariffmatters far more over 25 years than the VAT line. Run your numbers first.