VAT on solar panels and batteries

Domestic installations of qualifying energy-saving materials, including solar panels and battery storage, are zero-rated for VAT. It is applied by the installer inside the quote, not reclaimed by you afterwards.

That distinction matters. There is no form to fill in and no refund to chase. If the relief applies, the price you are quoted should already reflect it, and the only job left to you is checking that it does.

The dates, exactly

The authoritative source is HMRC’s VAT notice 708/6, and its wording is precise: the zero rate applies to the installation of specified energy-saving materials from 1 May 2023 to 31 March 2027, and from 1 April 2027 these revert to the reduced rate of 5%.

Two consequences worth registering:

• The relief covers the whole UK, Northern Ireland included, from that May 2023 date.
• There is a deadline. An installation completed before April 2027 is zero-rated; the same job afterwards carries 5%. On a typical system that is a few hundred pounds of difference, real money, though not by itself a reason to rush a decision the rest of the arithmetic does not support.

What to check on your quote

The practical test is simple: the quote should not be carrying a standard-rate VAT line against the qualifying elements. If it is, ask why before signing.

There are legitimate reasons for a mixed treatment, and there is one common illegitimate one.

Legitimate: the job includes work that does not qualify. Re-roofing, rewiring beyond what the installation requires, or general building work done at the same time may be treated differently from the panels themselves. A good quote separates the two and shows which is which, the same discipline that applies to everything else a quote should itemise.

Not legitimate: an installer applying standard-rate VAT to the whole job because it is simpler, or because they have not kept up. You are entitled to ask them to set out the treatment, and the notice above is the document to hold the answer against.

It is usually worth more than a grant

This is the part people miss while hunting for funding schemes.

Put a number on it against the government’s 2025/26 median cost data: a 4kW system at the £1,780 per kilowatt median is about £7,100 zero-rated. The same installation at the old standard rate would carry roughly £1,400 of VAT, and even the 5% rate returning in 2027 adds about £350. The relief applies to the whole qualifying installation, automatically, with no eligibility criteria about your income, your benefits or your property’s energy rating.

Most grant schemes are narrow, means-tested and oversubscribed, as the honest tour of what actually exists shows. For the majority of owner-occupier households, this relief is the entire subsidy, it is larger than most advertised grants ever were, and it requires nothing but an installer who applies the rules.

What it covers

The relief is written around energy-saving materials installed in residential property. For a household considering solar, the notice’s list includes the panels, the mounting, the inverter and battery storage. The battery position is worth knowing precisely: from 1 February 2024, electrical storage batteries qualify even when retrofitted on their own, which removed an odd earlier situation where fitting a battery with panels was treated differently from fitting one afterwards. The qualifying list is longer than solar, insulation and heat pumps are on it too, and section 2 of the notice is the canonical inventory.

Because the scope has been revised more than once, confirm the current position in the notice rather than relying on any summary, including this one.

What it does to the arithmetic

The relief reduces the capital you have to recover, so payback shortens roughly in proportion: the £1,400 it removes from the median 4kW system is about two years of that system’s typical annual saving.

When comparing quotes, make sure you are comparing like with like. A quote showing a price including VAT and another showing a price excluding it are not comparable, and the difference is large enough to reverse an apparent ranking. Always compare on the total payable, per kilowatt peak, as the quote-reading checklist sets out.

The edge cases worth knowing by name

A few boundary situations recur, and the notice resolves each. A battery retrofitted alone: zero rated since 1 February 2024, as above, so a storage-only quote should be as VAT-free as a panel one. A smart diverter retrofitted to an existing system: zero rated from the same date, by name in the notice. Repairs and replacements after the original installation, a new inverter in year twelve: these are generally not the installation of energy-saving materials, so expect VAT on the mid-life inverter swap and budget accordingly. Scaffolding billed within the installer’s single supply of installed solar shares the zero rate; scaffolding you hire separately yourself does not.

The pattern behind the cases: the relief attaches to the supply of installing qualifying materials, not to everything solar-adjacent, and the further a cost sits from that supply, the more likely it carries VAT. When a quote’s treatment surprises you in either direction, the notice’s section on qualifying installations is a ten minute read that settles it.

Landlords, businesses and mixed use

The relief is aimed at residential installations. Commercial premises are treated differently, and mixed-use property can be genuinely complicated.

If you are a landlord, or the property is part residential and part business, this is worth confirming specifically rather than assuming the domestic treatment applies. The amounts involved justify a direct question to your installer and, if it is not clear-cut, to an accountant with the notice open.

Do not let it decide the system

The relief applies to the qualifying installation whatever its size, so it does not favour one specification over another. It reduces the cost of whatever you buy.

That means it should not change what you buy, only what it costs. Size the system on your consumption and your roof, compare quotes on cost per kilowatt peak with VAT included, and then run the payback with the real, zero-rated price. Treat the relief as the reason the numbers are better than they would otherwise be, rather than as a reason to spend more, and treat any installer using “the VAT deadline” as urgency theatre with the scepticism that sales tactic has earned.