The 0% VAT rate on solar panels will last until the 1st of April 2027. After that, VAT on solar panels will increase to 5% – meaning it won’t go back to the 20% rate. You won’t need to meet the pre-April 2022 criteria to qualify for the reduced rate either. The 5% VAT rate will apply to solar panels being installed on any residential property.
The 0% VAT on solar panels in the UK is a temporary measure, set to last until 31 March 2027. From 1 April 2027 onwards, the VAT rate on solar panel supplies will go back to the reduced rate of 5%, in line with the UK government's financial and renewable energy goals. Does 0% VAT apply to solar batteries?
In February 2024, the government added storage batteries to the list of green products that enjoy a 0% VAT rate – and it makes no difference whether you get solar panels too or not. This could save you hundreds of pounds, though you'll still spend thousands in upfront costs. Domestic solar export revenues are usually not taxable.
According to the UK government's list of Energy Saving Measures (ESMs), most solar photovoltaic (PV) panels installed on residential properties in Scotland, England and Wales (plus Northern Ireland, as of 1 May 2023) are exempt from VAT, meaning there’s no VAT included in the purchase and installation costs.
And if you buy solar panels from one provider and have them installed by someone else, you'll be hit with a standard 5% or 20% VAT rate when buying them. It's also worth remembering that any maintenance or repairs after installation will be at the standard VAT rate. The 0% VAT on solar panels in the UK is set to last until 31 March 2027.
As a rough rule of thumb, the tax saving is roughly equivalent to 1 year of benefits of your solar array. How does the 50% tax break for solar panels work?