0% VAT on solar panels: what it covers and when it ends

Since April 2022, solar panel installations in the UK have attracted 0% VAT instead of the standard 20% rate. This is confirmed until 31 March 2027. On a typical 4kWp home installation, the saving is around £1,000–£1,200 compared to paying standard-rate VAT. It is the least talked-about incentive but one of the most straightforward.

Background: how VAT on solar changed

Before April 2022, solar installations were subject to a 5% reduced VAT rate (not the full 20% standard rate, but not zero either). In the Spring Statement of 2022, the government cut this to 0% as part of a broader push on energy efficiency improvements, alongside similar 0% rates for heat pumps, insulation, and other measures.

This 0% rate is a temporary relief. It is confirmed to run until 31 March 2027, at which point it reverts to the reduced rate of 5% (not back to full 20%).

What the 0% rate covers

HMRC guidance covers the following when supplied and installed together as part of a solar PV installation:

• Solar photovoltaic (PV) panels
• Inverter (string, hybrid, or microinverter)
• Mounting and racking systems
• Cables and wiring
• Installation labour
• Battery storage — when installed at the same time as new solar panels

The battery-only retrofit question

This is the area of most confusion. The 0% rate clearly applies to a battery installed simultaneously with new solar panels as part of the same installation project. HMRC guidance has treated battery-only retrofits (adding a battery to an existing solar installation) differently — these have historically attracted 20% standard-rate VAT in HMRC's interpretation.

If you are planning to add a battery to existing panels, confirm the VAT treatment in writing with your installer before accepting a quote. The difference between 0% and 20% on a £5,000–£8,000 battery installation is significant.

How much does 0% VAT save?

Solar installation prices vary considerably by system size and installer. Using typical mid-2026 installed prices:

• 3kWp system (supply + install, no battery): ~£6,000 including 0% VAT / ~£7,200 at 20% VAT — saving ~£1,200
• 4kWp system: ~£7,500 / ~£9,000 — saving ~£1,500
• 4kWp with 10kWh battery: ~£13,000 / ~£15,600 — saving ~£2,600

These are illustrative. The actual saving depends on your quoted price and system size. The point is that 0% VAT is not trivial — it represents a meaningful percentage of total install cost.

After March 2027, the reversion to 5% reduces but does not eliminate the incentive. A 4kWp system at 5% VAT would be roughly £375 more expensive than the same system at 0% — meaningful, but not a cliff edge.

Does 0% VAT mean I need to act before March 2027?

Not necessarily. The difference between 0% and 5% (the rate it reverts to) is modest. Do not rush into a poor installation or accept an overpriced quote just to beat the deadline — the 0% saving is not large enough to justify a bad purchasing decision.

Where the deadline matters more is for people who are already planning to install within the next 12 months. If you are at the quote stage, there is no reason to delay into the 5% era.

If you are waiting to see how your finances or housing situation develops, the 5% rate from April 2027 is not a crisis — it is roughly back to where VAT on solar was before April 2022.

Frequently asked questions