VAT on Solar Panels Rises to 5% in April 2027

The 0% VAT rate on home solar panels and batteries in the UK ends on 31 March 2027, and from 1 April 2027 installation reverts to the 5% reduced rate. That is not the old 20% bill — but on a typical system it still adds a few hundred pounds, and 2026 is already a record year for installations, so installer diaries are filling up. Here is exactly what changes, what it costs, and how the timing rules work if you are thinking of signing a quote this winter.

What is changing on 1 April 2027

HMRC's VAT Notice 708/6 is explicit: a zero rate applies to the installation of specified energy-saving materials from 1 May 2023 to 31 March 2027, and “from 1 April 2027 onwards these will revert to the reduced rate of VAT of 5%”. Solar panels and batteries are both on the list. Standalone batteries — including one added to an existing solar system — have been covered since 1 February 2024.

Three details matter for how the relief works in practice:

• The installer must supply and fit. The relief covers the installation service and the materials when supplied by the person who installs them. If you buy materials on their own without installation, that supply is standard-rated, and a retailer's sale of energy-saving materials is always standard-rated.
• It is for homes. The core condition is residential accommodation. Hotels, hospitals, prisons and similar establishments pay the standard rate.
• You do not apply for it. A VAT-registered installer applies the rate on your quote and invoice. If your quote adds 20% VAT to a home install today, ask why.

For the wider picture of what you can claim in 2026, see our guide to UK solar grants and VAT relief.

What 5% VAT adds to a typical install

On a typical system, the change is worth roughly £300 on panels and £200–£350 on a battery. The Energy Saving Trust puts a typical 4kWp installation at around £6,100; 5% of that is about £305. A 10kWh lithium battery typically costs £4,000–£7,000 installed (see are solar batteries worth it?), so 5% is roughly £200–£350. Panels and a battery together would therefore cost around £500–£650 more from April 2027, assuming the pre-VAT price does not move.

These are our own calculations from the benchmark prices above, not quotes — your installer's pre-VAT price, and any hardware price changes, will decide the real figure. For what a system costs before VAT, see solar panel cost in the UK.

Which date counts: signing, paying or installing?

The date that matters for VAT is the “tax point”, not the date you sign. HMRC's VAT Guide (Notice 700) says the tax point for a service is normally when the work is performed — usually the date all the work except invoicing is complete (paragraph 14.2.1). But if the installer issues an invoice or receives payment before that, the date of the invoice or payment becomes the tax point for that amount (14.2.2). It also says no change of rate can apply to a supply with a tax point before the effective date of the change (30.4).

In plain terms, a deposit invoiced and paid in March 2027 is likely to be taxed at 0%, while a balance invoiced after the job finishes in, say, May 2027 would normally be taxed at 5%. Treat this as a general rule, not advice: HMRC's special rate-change provisions (section 30) can alter the outcome, so ask your installer in writing how they will treat the deposit, stage payments and final invoice, and call HMRC's VAT helpline if the answer is unclear. Do not assume that signing a contract alone fixes the rate — the guide says a tax point cannot be created simply by preparing an invoice.

Why 2026 is not the time to leave it late

Demand is at record levels. Solar Energy UK reports 207,619 MCS-certified installations so far in 2026, already beating the previous annual record of 203,697, and says the year is on track for around 300,000 if the pace holds (we cover this in UK solar installations hit a new record). More demand means longer waits for surveys and install slots, and a job that slips from March into April could change the VAT treatment of the final invoice.

Practical timing advice:

• Get quotes in autumn. Allow time to compare at least three, ideally from MCS-certified installers.
• Ask for a firm install date and a clear payment schedule in the contract.
• Do not rush into a bad deal. A 5% saving is not worth an uncertified installer, a missing guarantee, or high-pressure sales. A 5% rise is also small next to the variation between quotes.
• Batteries are included. If you are planning a battery retrofit, the same 31 March 2027 date applies — see our home battery installation guide.

Could the 0% rate be extended?

No extension has been announced at the time of writing. The 31 March 2027 end date is what HMRC's guidance currently says, and the relief has been extended or amended before, so a change in a future Budget is possible but unconfirmed. Do not plan around it: if you want to be certain of 0%, plan to have the work (or at least the invoice or payment, per the tax point rules above) completed before 1 April 2027, and treat any later extension as a bonus.

New-build homes are treated differently from retrofit; this article covers installing solar on an existing home. And this relief is separate from the temporary cut to VAT on electricity bills that runs from 1 October 2026 — see VAT on electricity bills for how the two differ.