Cost Guides

0% VAT on Solar Panels UK: Everything You Need to Know

Since April 2022, domestic solar panel and battery storage installations in the UK have been subject to 0% VAT, saving homeowners approximately 20% on the total cost. This guide explains exactly what is covered, who qualifies, how much you save, and how long the zero-rate VAT relief is expected to last.

6 min read 22 February 2026

What Does 0% VAT on Solar Panels Mean?

The 0% VAT rate on energy-saving materials means that qualifying domestic solar panel installations are not subject to any Value Added Tax. Before April 2022, solar installations were subject to 5% reduced-rate VAT (reduced from the standard 20% in 2019). The move to 0% represents a significant additional saving for homeowners.

The zero rate applies to both the materials and the labour element of the installation. This means the solar panels themselves, the inverter, battery storage, mounting hardware, cabling, the electrician labour, the scaffolding, and all associated installation work are all VAT-free.

Importantly, this is a zero rate, not a VAT exemption. The distinction matters for the installer but not for you as a customer. In practical terms, the price you pay should include no VAT at all. If your quote shows VAT being charged on a qualifying domestic solar installation, query it immediately with the installer.

0% VAT since April 2022 (previously 5%, before that 20%)
Covers materials, labour, scaffolding, and all installation costs
Applies to solar panels, inverters, batteries, and mounting systems
Applies to EV chargers when installed alongside solar
No application or claim process required, automatic

Did You Know

The 0% VAT rate on energy-saving materials has been confirmed until at least 31 March 2027. The government has indicated it may become permanent, but this has not yet been formally legislated.

Who Qualifies for 0% VAT?

The 0% VAT rate applies to installations on qualifying residential properties. The key criteria are straightforward and the vast majority of Hampshire homeowners will qualify.

The property must be a residential dwelling. This includes houses, bungalows, flats, maisonettes, and converted properties that are used as someone primary residence. Holiday homes and second homes also qualify, provided they are residential in nature. The property does not need to be owner-occupied; the relief also applies to rental properties.

The installation must be on or adjacent to the qualifying building. Roof-mounted and wall-mounted solar panels obviously qualify. Ground-mounted systems in the garden of a residential property also qualify, as do carport and garage-mounted systems on the same property.

The property must have been built more than two years ago if the installation is on a building that is not a residence. This condition is designed to prevent VAT avoidance on commercial developments. For straightforward residential solar installations, the two-year rule rarely applies.

Commercial properties do not qualify for the 0% rate. If you are installing solar on a business premises, the standard 20% VAT rate applies. Mixed-use properties may qualify for the zero rate on the residential portion only.

Residential properties: houses, flats, bungalows, conversions
Owner-occupied and rental properties both qualify
Holiday homes and second homes qualify
Ground-mounted systems on residential land qualify
Commercial properties do not qualify (20% VAT applies)
No income or means test, available to all homeowners

How Much Do You Save?

The saving from 0% VAT is straightforward to calculate: it is approximately 20% of the total installation cost compared to the standard VAT rate, or approximately 5% compared to the previous reduced rate that applied before April 2022.

For typical Hampshire solar installations, the savings are substantial. A 4kW solar-only system costing £6,000 saves £1,200 compared to the standard 20% rate. A 4kW system with 10kWh battery costing £10,000 saves £2,000. A premium SigEnergy 5-in-1 system costing £14,500 saves £2,900.

These savings are applied automatically at the point of sale. Your installer should not charge any VAT on a qualifying domestic installation. You do not need to apply for the relief, claim it back from HMRC, or complete any paperwork. If VAT appears on your invoice for a qualifying installation, this is an error and should be raised with the installer.

For homeowners who installed solar panels before April 2022 and paid VAT, there is unfortunately no mechanism to reclaim the VAT retrospectively. The zero rate applies only to installations completed on or after 1 April 2022.

3kW solar system (£5,000): save £1,000 vs 20% VAT
4kW system + battery (£10,000): save £2,000 vs 20% VAT
5kW system + battery (£12,000): save £2,400 vs 20% VAT
SigEnergy premium system (£14,500): save £2,900 vs 20% VAT
No retrospective claims for pre-April 2022 installations

Pro Tip

When comparing quotes from different installers, ensure all prices are presented on the same basis. Reputable installers will quote 0% VAT for qualifying residential installations. If one quote includes VAT and another does not, you are not comparing like-for-like.

What About Retrofit Battery Storage?

The 0% VAT rules for battery storage installed separately from solar panels, known as retrofit battery installation, have specific conditions that homeowners need to understand.

When battery storage is installed at the same time as solar panels as part of a single project, the 0% VAT rate clearly applies to the entire installation including the battery. This is the most common scenario and the most straightforward.

For standalone retrofit battery installations, where a battery is being added to an existing solar system, the 0% VAT rate also applies. The Energy-Saving Materials Order specifically includes electricity storage systems as qualifying energy-saving materials, whether or not they are installed alongside solar panels.

However, if your battery installation requires a new hybrid inverter to replace your existing string inverter, the inverter replacement is also covered at 0% VAT as it forms part of the energy-saving material installation. All associated electrical work, wiring, and commissioning are also zero-rated.

Some confusion existed in the early months of the zero-rate policy regarding standalone batteries, but HMRC guidance has since confirmed that all domestic battery storage installations qualify for 0% VAT regardless of whether they are installed alongside new solar panels.

Battery with new solar: 0% VAT on entire installation
Standalone retrofit battery: 0% VAT confirmed by HMRC
Replacement hybrid inverter: 0% VAT as part of battery install
All electrical work and commissioning: 0% VAT
Both wall-mounted and floor-mounted batteries qualify

Did You Know

If you already have solar panels and want to add a battery, you will not pay any VAT on the battery installation. This applies regardless of when your original solar panels were installed or whether you paid VAT on them at the time.

How Long Will 0% VAT Last?

The 0% VAT rate on energy-saving materials was introduced in the Spring Statement 2022 and initially applied from 1 April 2022 to 31 March 2027. This gives a minimum five-year window for homeowners to benefit from zero-rated installations.

The government has signalled its intention to make the 0% rate permanent, but as of early 2026, this has not been formally enacted in legislation. The Autumn Statement 2024 confirmed the rate would continue beyond March 2027, but the precise mechanism, whether through extension or permanent legislation, has not been finalised.

Industry bodies including the Solar Energy UK trade association are lobbying for permanent zero-rating, arguing that it provides certainty for consumers and supports the government net zero targets. Given the broad political support for domestic renewable energy across all major parties, a reversion to standard VAT rates appears unlikely.

However, if you are considering solar panels and the 0% VAT is a significant factor in your decision, there is value in proceeding before March 2027 to guarantee the saving. A 4kW system with battery that would save £2,000 in VAT today is better installed at 0% than waiting for a political decision that may or may not come.

Our advice is straightforward: the 0% VAT makes 2026 an excellent time to install solar panels, and waiting carries a small but real risk of paying more if the rate changes.

Important

While the 0% VAT rate is expected to continue beyond March 2027, it has not been permanently legislated. If VAT relief is a significant factor in your decision, consider installing before the current guaranteed period ends.