Since April 2022, solar panels and battery storage installed in residential properties in the UK have been zero-rated for VAT — 0% rather than the usual 20%. The relief was originally for a five-year window. In 2024 it was extended.
It’s the single biggest tax change to affect UK solar pricing in a decade, and it makes a meaningful dent in install costs. Here’s what it covers, who qualifies, and when it ends.
What’s covered by the 0% VAT relief
The 0% rate currently applies to:
- Solar PV panel systems
- Solar thermal (hot water) systems
- Battery storage systems installed alongside solar PV
- Battery storage systems installed standalone (as of February 2024)
- Air source heat pumps
- Ground source heat pumps
- Insulation (loft, cavity wall, solid wall)
- Wind and water turbines
- Heat pumps
- Smart heating controls
Note that the relief covers the combined supply and installation — the panels, the inverter, the labour, the mounting hardware, the electrical work. Standalone hardware bought from a wholesaler without installation is still subject to VAT.
When does the relief end?
Currently the relief is scheduled to run until 31 March 2027. At that point the rate is set to revert to 5% (the reduced rate for energy-saving materials), which is itself lower than the standard 20% rate.
There’s a fair chance the 0% rate will be extended further given the government’s net-zero commitments, but at the time of writing the legislated cliff is March 2027.
How much money does 0% VAT save you?
Pre-2022, a typical 4kW residential solar install plus VAT cost roughly £8,200–£9,600. Today, the same install is in the £6,500–£8,000 range — a saving of £1,200–£1,800 directly attributable to the VAT relief.
For a larger system with a battery:
| Install | Pre-2022 (with 20% VAT) | 2026 (with 0% VAT) | Saving |
|---|---|---|---|
| 3kW solar | £6,000–£7,800 | £5,000–£6,500 | £1,000–£1,300 |
| 4kW solar | £7,800–£9,600 | £6,500–£8,000 | £1,300–£1,600 |
| 5kW solar | £9,000–£11,400 | £7,500–£9,500 | £1,500–£1,900 |
| 4kW solar + 10kWh battery | £12,500–£16,800 | £10,500–£14,000 | £2,000–£2,800 |
Does the relief apply to retrofit batteries?
Yes — as of February 2024, the relief was extended to standalone battery storage retrofits. Before that, the 0% rate only applied if the battery was installed at the same time as solar panels.
Practically, that means if you have existing solar panels and want to add a battery storage system, the battery is now zero-rated for VAT. A 10 kWh battery retrofit that would have been £5,400 with VAT in 2022 is now £4,500.
Who qualifies?
The relief applies to:
- Residential properties (owner-occupied or rental)
- Charitable buildings (used for relevant residential or charitable purposes)
- Mixed-use buildings (the residential portion only)
It does not apply to:
- Commercial premises (these stay at standard 20% VAT)
- Hardware-only purchases without installation
- Installations in countries outside the UK
There’s no minimum or maximum system size, no income test, and no requirement to live in the property full-time — just that it be residential.
How does the relief actually work?
Simple. Your installer (us) treats the supply at 0% on the invoice. You don’t pay VAT, we don’t charge VAT, and we don’t reclaim it through our VAT return. The Treasury foregoes the revenue.
There’s no application form for you to fill out. The relief is automatic on a qualifying installation by a VAT-registered installer.
What happens after March 2027?
Unless extended (which seems likely but isn’t certain), the relief reverts to 5% — the standard reduced rate for energy-saving materials. That would add £300–£400 to a typical 4kW install. Not huge, but a real difference for those near the affordability margin.
If you’ve been thinking about solar but waiting, there’s a fair case to act before the end of the current relief window.
Bottom line
0% VAT until at least March 2027 is one of the biggest single-policy reasons solar in the UK is cheaper now than at any point in the last 15 years. Combined with falling panel prices, rising grid electricity costs, and improved battery technology, the 2026 economics for residential solar are genuinely strong.
If you’ve been considering it, this is one of the better windows we’ve had.
