VAT on Solar Panels and Battery Storage: 2026 UK Rules
Before going ahead with your solar project and committing to a price that you have been quoted, it’s worth considering the VAT, especially if you are currently considering installing solar panels on your property or adding a battery.
The reason for this is that the current 0% VAT rate can make a real difference to the total cost of the project, whether upgrading your existing installation or having new solar panels or a battery for the first time.
The rules also take into account certain battery installations as well as buildings used solely for charitable purposes. However, the tax relief isn’t permanent, and the current rules are scheduled to change after 31 March 2027.
Let’s now dive straight in and take a closer look at exactly how these rules work, who qualifies, and the other important things to consider before sorting an installation.
Is there a 0% VAT rate on solar panels?
Yes. When supplied and installed as part of a qualifying installation, solar photovoltaic PV installations in residential accommodation currently benefit from a 0% VAT rate. In other words, for eligible customers, the usual 20% VAT on the qualifying installation doesn’t apply, which effectively saves homeowners 20% on their total bill compared to standard goods.
For instance, if the net price of an eligible solar installation is £8,000, a further £1,600 would be added to the total cost because of the 20% VAT charge. Therefore, with the 0% tax relief, there is no VAT charge, which would save you £1,600. However, the total savings will depend on the price and several other factors that are included in the installation.
Before deciding on your next best course of action, a good starting point would be to understand the full cost of the type of system you will need. This useful Spartek guide goes into greater detail about how much solar panels cost, plus it covers the key factors that can have a major impact on your final quote.
The relief is set out in HMRC’s VAT Notice 708/6, which shows you exactly how VAT applies to energy-saving materials and their installation.
It is also worth noting that the zero rate applies only where the relevant conditions are met, so don’t forget this. For example, not every type of supply or service automatically qualifies, and nor does every product marketed as solar equipment.
Are solar batteries exempt from VAT?
Yes. Under the current rules, qualifying electrical storage batteries can also benefit from 0% VAT. This applies to certain battery installations carried out separately, and new solar installations that include a battery.
You will likely still come across much older advice from various websites that suggest all standalone battery installations are subject to 20% VAT. This information and other information on these websites may be out of date because these rules were expanded from February 1, 2024.
The batteries must still meet the current HMRC guideline conditions, which confirms that qualifying battery installations can include batteries that store electricity from the grid, ones that are retrofitted to store electricity generated by solar panels, and ones that store electricity from both sources.
With that in mind, another common question that UK homeowners ask is ‘what if they already have solar panels on their property?’ The answer to this is that if your solar panels are already installed, you won’t necessarily have to replace the whole system to benefit from the current VAT relief.
For example, having additional battery storage installed may allow you to store surplus electricity generated during the day so it can be used later on in the day, instead of exporting as much of it to the grid and then buying back the electricity in the evening.
To determine whether adding a battery will be financially beneficial for you depends on your current situation and circumstances, such as your existing system, how much electricity you use, the cost of the installation, and the tariff. Before going ahead, remember to check the total cost and how much you are expected to save because the VAT relief that you can benefit from is just one part of the process.
Who qualifies for the zero-rate VAT relief?
The rules cover qualifying installations in residential accommodation and certain buildings used solely for charitable purposes, but the exact treatment depends on how the work is supplied, the equipment needed for the installation, and the building itself.
With residential homes, for example, the zero rate can be applied to eligible solar panel and battery installations in residential properties. The latest HMRC rules typically encompass houses, flats, and other types of accommodation.
The underlying value here is that the installation must meet specific conditions to qualify for the relief. If you are currently in the process of planning for a new domestic solar installation, the company that you choose to install it for you should be able to explain how VAT applies to the work. The quote should also show the VAT treatment that you qualify for.
Can charities qualify for 0% VAT?
Yes. If qualifying energy-saving material installations are added to a building that is intended for use solely for charitable reasons, then they can also benefit from the 0% tax rate, which may include certain community centres and village halls, for example. It’s also worth noting that not every charity-owned building will automatically qualify for the relief. The nature of the building and for which purposes it is used must meet the strict criteria.
This may include buildings such as certain village halls or community facilities used solely for qualifying charitable purposes. It does not mean that every building owned by a charity automatically qualifies. The intended use of the building and the nature of the installation must meet the rules.
Before going ahead with the project and agreeing to the work to be carried out for the installation of solar panels or batteries, charities should always check to find out if they qualify.
Another common question that people ask is whether or not the zero rate applies to DIY solar panels, and equally important is the distinction between purchasing solar equipment and then having it installed.
For example, purchasing solar panels or a battery on its own for a DIY project typically does not qualify for this installation relief. Therefore, a standard-rate VAT usually applies to the supply-only purchase.
The zero rate generally applies to qualifying supplies of energy-saving materials when the supplier also installs them in eligible residential accommodation or a qualifying charitable building.
This essentially means that paying an installer to supply and fit a qualifying systems not the same as buying the equipment yourself online.
Having solar panels and/or batteries installed by professionals brings with it the benefit of having a well-designed system that is connected properly and commissioned with the relevant documentation. When it comes to comparing quotes, always pay close attention to whether the price you have been offered includes key elements such as the electrical work that needs to be carried out, the equipment needed, labour, and all other necessary arrangements.
Is the VAT rate changing in 2026 or 2027?
The 0% VAT rate that is currently being offered isn’t long-term. According to the rules, it is only expected to be in place until March 31, 2027.
Unless there are changes to the rule before April 1, 2027, qualifying installations of energy-saving materials in residential accommodation and relevant charitable buildings are scheduled to move to the reduced VAT rate of 5%. This has been clearly set out in HMRC’s VAT Notice 708/6.
Without comparing which options you have available, there’s no need to worry or rush into decisions. If plans are already in place for you to have solar panels or batteries installed, the total cost of your project can be affected by exactly when your project starts.
For example, if you have been quoted £8,000 before VAT on your eligible installation, the 5% charge from April 1 would cost you a further £400, but without the VAT charge, there wouldn’t be any extra cost. The value of the quote will likely include one or more qualifying and non-qualifying items, so the final difference will be determined by the actual work that’s carried out.
If you have been thinking about getting solar panels or batteries installed prior to the April 1 deadline, you’re best off reaching out to the company you have chosen to install them to find out exactly how VAT will be applied, and get them to confirm when they plan on carrying out your qualifying solar installation.
The 0% tax rate mentioned on this page applies to qualifying installations in residential accommodation and certain buildings used solely for relevant charitable purposes. Solar installations on shops, offices, warehouses, and other commercial premises are typically not covered.
Solar installations on commercial buildings like this are typically subject to the standard VAT rules. Also, subject to the usual conditions and their own circumstances, VAT-registered businesses may be able to reclaim VAT on eligible business purchases. Therefore, business owners should still check whether they are eligible with their accountant and solar installer before going ahead.
Provided it meets HMRC’s criteria, any equipment that is supplied and installed as part of the solar panel installation, such as the control panels, cabling, the AC/DC inverter, and the solar panels themselves, may fall within the zero-rated supply, but the VAT treatment of separately purchased equipment, replacement parts or standalone services can differ.
It’s best to check the VAT treatment with the supplier rather than assuming that all solar-related products are zero-rated, especially if you are buying an inverter or mounting equipment independently.
People also often ask if they need to apply for the 0% VAT rate. The short answer to this is that homeowners usually don’t need to apply separately. The ones responsible for applying the correct VAT treatment to the qualifying supply are the installer or supplier.
However, if you are unsure at any point about which parts of the installation will qualify, simply ask your installer and check your quotation.
There’s also the question of whether the 0% VAT rate applies to batteries fitted to existing solar panels. The good news is that qualifying battery installations can benefit from the zero rate under the rules introduced on 1 February 2024.
This includes certain batteries retrofitted to store electricity generated by an existing solar PV system, as well as qualifying standalone batteries. However, the installation must still meet the relevant conditions.
Conclusion and next steps
Solar panels and batteries are more affordable than ever for eligible homeowners and certain charitable organisations thanks to the 0% VAT rate, which will remain in effect for all qualifying installations until 31 March 2027, while the reduced rate of 5% is currently scheduled to come into effect from 1 April 2027.
If you are currently looking to go ahead with a new solar system or perhaps adding a battery to an existing installation, the best course of action is to ask for a clear, itemised quotation, but also check how VAT can be applied to the work that you get done. Doing so will help you compare the true cost rather than relying on an advertised price that may not include everything you need.
Spartek can help you understand the options for your property and provide a tailored quotation for your installation. Get in touch today to discuss your requirements and arrange a no-obligation quote.
