0% VAT on Solar Panels: What It Covers

Since 1 April 2022, solar panel installations in Great Britain have attracted 0% VAT instead of the standard 20% rate; Northern Ireland joined the relief on 1 May 2023, so it now applies UK-wide. The relief runs until 31 March 2027. On a typical 4kWp home installation, the saving is around £1,000–£1,500 compared with paying standard-rate VAT. It is the least talked-about incentive but one of the most straightforward — there are no eligibility tests, no application, and no income limits.

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% in Great Britain from 1 April 2022 as part of a broader push on energy efficiency, alongside similar 0% rates for heat pumps, insulation, and other energy-saving materials. The April 2022 reform also removed the old qualifying-use and 60% materials-value tests, so the relief now applies to ordinary domestic installations without any social-policy or income conditions.

Northern Ireland was initially left out and stayed on the 5% reduced rate; the 0% rate was then extended to Northern Ireland from 1 May 2023, so the relief is now identical across the whole UK.

This 0% rate is a temporary relief. It runs until 31 March 2027, after which — from 1 April 2027 — it is legislated to revert to the reduced rate of 5% (not back to full 20%).

What the 0% rate covers

Under HMRC's VAT Notice 708/6, a solar PV installation is zero-rated when the materials are supplied and installed together. That covers:

Solar photovoltaic (PV) panels
Inverter (string, hybrid, or microinverter)
Mounting and racking systems
Cables and wiring
Installation labour
Battery storage — installed with the panels or on its own (see below)

The relief covers the supply-and-install of qualifying materials. If you buy materials on their own (for example panels for a self-install, with no installer fitting them) the 0% rate does not apply — it is a relief on installation, not a relief on buying kit over the counter.

Battery storage: now zero-rated on its own too

This used to be the area of most confusion, and a lot of older guidance online is now out of date. The position today is straightforward: since 1 February 2024 HMRC zero-rates electrical battery storage installed on its own — whether you retrofit a battery to an existing solar system, or install a standalone battery that simply charges from the grid. Before that date, a battery-only retrofit was treated as a 20% standard-rated supply; that is no longer the case.

In short: a battery added with new panels, a battery retrofitted to existing panels, and a grid-charged standalone battery all qualify for 0% VAT today. If you are working from an older quote or article that says battery retrofits are 20%, it pre-dates the February 2024 change — confirm the current treatment in writing with your installer.

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 31 March 2027, the reversion to 5% reduces but does not eliminate the incentive. A 4kWp system priced around £7,500 net would be roughly £375 more expensive at 5% VAT than 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

Does 0% VAT apply to battery storage as well?

Yes. A battery installed at the same time as new solar panels has always qualified. Since 1 February 2024, HMRC also zero-rates electrical battery storage installed on its own — whether retrofitted to an existing solar system or installed as a standalone unit charged from the grid. So a battery-only retrofit added after 1 February 2024 now qualifies for 0% VAT, not the 20% standard rate that applied before then. Always confirm the VAT treatment in writing with your installer.

When does 0% VAT end?

The 0% rate runs until 31 March 2027. From 1 April 2027 it is legislated to revert to the reduced rate of 5% (not the full 20% standard rate). The reversion to 5% is less dramatic than many assume — on a typical 4kWp system it means roughly an extra £375 versus the 0% rate.

Does 0% VAT apply in Scotland, Wales, and Northern Ireland?

Yes. The 0% rate applied across Great Britain (England, Scotland and Wales) from 1 April 2022. Northern Ireland was initially excluded and stayed on the 5% reduced rate, but the 0% rate was extended to Northern Ireland from 1 May 2023. The relief is now the same across the whole UK and runs until 31 March 2027.

Does 0% VAT apply if I use a finance arrangement or solar loan?

Yes. The VAT relief applies to the installation cost regardless of how you pay for it. If you finance a solar installation, the VAT relief is already included in the quoted price — you do not need to do anything extra.

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