0% VAT on solar panels, batteries and heat pumps: what it covers and when it ends
Since April 2022, the installation of energy-saving materials in homes has been zero-rated for VAT. In plain terms, you don't pay VAT on qualifying solar panels, batteries and heat pumps fitted in your home. That relief is temporary. HMRC's guidance says the zero rate applies until 31 March 2027, and from 1 April 2027 it's due to return to 5%.
If you're thinking about a system in the next year or so, here's what you need to know.
What's covered
HMRC's VAT Notice 708/6 lists the energy-saving materials that qualify. For a typical Edinburgh or Lothians home, the main ones are:
Solar panels
Electrical storage batteries, either installed with solar panels or other microgeneration, or on their own to store grid electricity
Air source and ground source heat pumps
Insulation, draught stripping and some heating controls
Batteries were added more fully from 1 February 2024, so a battery retrofitted to existing panels now qualifies too.
What has to be true for 0% to apply
It's installed, not just supplied. The zero rate applies to the supply and installation of the materials. If you buy panels yourself and get someone else to fit them, the panels you bought won't be zero-rated.
It's in residential accommodation, such as a house or flat, or certain buildings used by charities.
The work is mainly the energy-saving materials. Other building work done at the same time may be charged at the standard rate. For example, replacing a whole roof is not zero-rated just because panels go on afterwards.
The installer should show VAT clearly on the quote and invoice. If you're unsure whether something qualifies, ask them to point to the line in Notice 708/6.
What isn't covered
Business premises. Solar on offices, shops, workshops or farm businesses doesn't get the residential zero rate. VAT-registered businesses can usually reclaim VAT in the normal way; speak to your accountant.
DIY supplies. Materials you buy without installation.
Unrelated building work done alongside.
The deadline matters more than it looks
Zero-rating depends on when the work is supplied, which is usually when it's completed and invoiced. If your installation finishes after 31 March 2027, the 5% rate is likely to apply unless the rules change. HMRC has its own rules on when a supply takes place, including payments made in advance, so don't rely on paying a deposit early to lock in 0%.
Practical points:
Allow for lead times. A survey, design, grid notification or application, and scaffold booking all take time. A G99 application to SP Energy Networks can take weeks. See our G98 and G99 guide.
Spring is busy. Many people will be trying to finish before the deadline. Booking in autumn or winter 2026 gives you more room.
Combine jobs. If you're adding a battery to existing panels, or planning a heat pump, doing them together can reduce scaffold and electrical costs.
Heat pumps: VAT and grant together
Heat pumps fitted in homes are also zero-rated until 31 March 2027. On top of that, Home Energy Scotland offers up to £7,500 grant plus an optional £7,500 interest-free loan for eligible homeowners. Read more in our heat pump funding guide.
What does 0% VAT save?
Five per cent of the installed price, compared with the reduced rate it's due to return to. On a typical system, that's a useful saving but not a reason to rush a poor design. Get the system right first.
Guide price for a typical home solar and battery system: [PRICE: Iain to confirm]
FAQs
When does 0% VAT on solar panels end?
HMRC's guidance says the zero rate applies until 31 March 2027. From 1 April 2027 the rate is due to return to 5%.
Is a battery added to existing solar panels zero-rated?
Yes. Since 1 February 2024, batteries installed in homes qualify, including retrofits to existing solar and standalone batteries.
Does 0% VAT apply to business premises?
No. The relief is for residential accommodation and certain charitable buildings. VAT-registered businesses usually reclaim VAT in the normal way.
If I pay a deposit before April 2027, do I keep the 0% rate?
Don't assume so. VAT timing depends on HMRC's rules on when the supply takes place. Aim to have the installation completed and invoiced before 1 April 2027.
Do I get 0% VAT if I buy the panels myself?
Not on the materials you buy separately. The zero rate applies to the supply and installation together.
Plan your install
If you want a system fitted before the zero rate ends, the sooner we survey, the more room there is for grid paperwork and scheduling.
Send the form with your postcode and what you want priced. We survey your home, then send the written quote. You decide after you have read it.