VAT on Solar Panels explained
Since April 2022, the UK government has applied a 0% VAT rate to residential solar panel installations, batteries, and heat pumps. This was extended in 2023 to apply throughout Great Britain until at least 2027, after which the rate may revert to 5%.
The saving is significant: on a £10,000 solar and battery installation, 0% VAT saves you £2,000 compared to the standard 20% rate, or £500 compared to the former 5% reduced rate.
What qualifies for 0% VAT:
- Solar PV panels
- Battery storage systems installed at the same time as solar (or later)
- Installation labour
- Scaffolding and access costs
- Inverters and associated electrical equipment
Important: the 0% rate applies to the supply and installation together. Panels purchased separately (e.g. DIY) are still subject to 20% VAT. The 0% rate only applies when installed by a VAT-registered business.
The 0% VAT relief is automatic — your installer should not be charging you VAT on qualifying residential solar installations. If a quote includes VAT, query it immediately. This relief does not apply to commercial or business installations, which remain at 20% VAT.