In a much-needed move towards energy efficiency, the government has unveiled plans to grant VAT relief on the installation of energy storage batteries. This welcome move extends far beyond the previous VAT relief policy, which was limited to batteries installed concurrently with solar panels.
“It’s fantastic that the government has extended tax relief on battery storage systems. The expanded VAT relief aligns with the UK’s commitment to reducing carbon emissions and promoting green energy solutions.
In this announcement, we capture the key factors that will allow you to get VAT Relief for energy storage devices and specifically batteries The relief applies to the services of installing energy-saving materials in residential accommodation and charitable buildings.
The new policy will go into effect on February 1st, 2024. How Long will VAT on Battery Storage be 0%? The United Kingdom-wide tax relief on these technologies is scheduled to expire on March 31, 2027. Following that, the tax will revert to the original 20% VAT at a reduced rate of 5%.
Battery Energy Storage Systems (BESS) were also exempt but with the condition that they must be installed alongside other energy-saving materials, such as solar. However, in a statement released on 11th December, the UK government made a noteworthy announcement—retrofitted BESS will now also be exempt from VAT.
The UK government’s decision to scrap VAT on battery storage systems carries profound implications for the renewable energy market. It’s a significant moment for the energy storage sector and the UK’s clean energy journey. Plus, the tax relief on these technologies is in place until March 31, 2027, across the entire United Kingdom.