0% VAT on Solar Panels: The Full Picture
Since April 2022, residential solar panel installations in the UK have been subject to 0% VAT, down from the standard 20% rate. This is one of the most significant financial incentives for homeowners considering solar panel installation, effectively reducing the cost by a sixth compared to what you would have paid before the policy change.
This guide explains exactly what qualifies, what does not, and answers the questions we get asked most frequently at ALPS Electrical.
What Qualifies for 0% VAT?
The 0% VAT rate applies to the supply and installation of energy-saving materials in residential properties. For solar and energy storage, this includes:
- Solar photovoltaic (PV) panels
- Solar inverters (string, hybrid and microinverters)
- Battery storage systems (when installed alongside or added to solar panels)
- Mounting hardware, cabling and all associated installation materials
- Labour costs for installation
- Scaffolding when it forms part of the installation
The key requirement is that the installation must be in a residential property. This can be your main home, a second home, or a property you rent out, provided it is used as a dwelling.
What Does NOT Qualify?
The 0% VAT rate does not apply to commercial or business premises. If you are a business installing solar panels on your factory, warehouse, office or farm building, the standard 20% VAT rate applies (though you can typically reclaim this as input VAT if you are VAT registered). Charitable organisations may be eligible for reduced rates in some circumstances.
Standalone battery storage installed without any solar panel system was initially subject to standard VAT, but the rules were updated in February 2024 to include standalone battery installations in residential properties at 0% VAT as well.
How Much Does 0% VAT Save You?
The saving is straightforward to calculate. On a typical 4kW solar panel system costing £6,000 at the 0% rate, the equivalent price with 20% VAT would have been £7,200. That is a saving of £1,200. On a larger system with battery storage costing £12,000, the saving is £2,400. These are significant sums that directly improve your payback period and return on investment.
How Long Will 0% VAT Last?
The 0% VAT rate was initially introduced until March 2027. Given the government's net zero commitments and the ongoing push towards renewable energy, it is widely expected to be extended beyond this date. However, government policy can change, and there is no guarantee. If you are considering solar panels, the current 0% VAT rate provides a strong incentive to act sooner rather than later.
Does 0% VAT Apply to EV Chargers?
No. EV charger installations are subject to the standard 20% VAT rate regardless of whether they are installed in a residential property. The 0% rate is specifically for energy-saving materials as defined by HMRC, and EV chargers do not currently fall within this definition. However, the OZEV grant of up to £350 can help offset the cost.
Do I Need to Do Anything Special to Get 0% VAT?
No. Your installer should automatically apply the 0% VAT rate to residential installations. At ALPS Electrical, all our residential quotes are priced at 0% VAT. You do not need to apply for anything or fill in any forms. The installer is responsible for ensuring the correct VAT rate is applied and accounting for it with HMRC.
You should check that your quote clearly states the VAT rate. If an installer is quoting you a residential installation at 20% VAT, they are either making an error or are not aware of the current legislation. All our quotes clearly show the 0% VAT rate applied.
Mixed-Use Properties
If your property is partly residential and partly commercial (for example, a flat above a shop), the 0% VAT rate may apply to the residential portion of the installation. The rules around mixed-use properties can be complex, and we recommend seeking advice from your accountant or HMRC if you are unsure.
Get a 0% VAT Quote Today
Take advantage of the 0% VAT rate while it lasts. Contact ALPS Electrical for a free, no-obligation quote for solar panels, battery storage or a combined system. All our residential installations include 0% VAT, MCS certification, full warranty support and a detailed savings projection.