VAT on Solar Panels UK: 0% Rate Explained
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Is there VAT on solar panels in the UK?
Residential solar panel installations in the UK currently attract 0% VAT (reduced from 5%, which itself was reduced from 20%). This applies to labour, panels, inverters, batteries, and all installation materials. The 0% rate saves £1,000–£1,600 compared to the standard 20% rate. It applies to installations on homes and residential properties. The 0% rate was introduced in April 2022 and is currently confirmed until at least March 2027.
Who Qualifies for 0% VAT?
You qualify for 0% VAT if: - The solar panels are installed on a residential property (house, flat, bungalow) - The property is your home or a residential rental property - The installation is carried out by a VAT-registered installer
You do NOT qualify for 0% VAT if: - The installation is on a commercial property (office, shop, warehouse) - You buy panels separately and install yourself (the 0% rate applies to the supply AND installation as a service) - The installer is not VAT-registered (they cannot charge VAT, but you miss the benefit of the zero rate)
Important detail: The 0% VAT applies to the entire installation package — panels, inverter, battery, mounting, wiring, scaffolding, and labour. Every component is zero-rated when supplied and installed together.
Source: HMRC VAT Notice 708/6; Finance Act 2022 Schedule 9A.
How Much Does 0% VAT Save?
Savings comparison by system size:
| System | Price (0% VAT) | Price (20% VAT) | VAT Saving |
|---|---|---|---|
| 3kW | £5,000 | £6,000 | £1,000 |
| 4kW | £6,750 | £8,100 | £1,350 |
| 5kW | £8,000 | £9,600 | £1,600 |
| 4kW + battery | £11,000 | £13,200 | £2,200 |
The VAT saving alone shortens payback by approximately 1–2 years. For a 4kW system, 0% VAT turns a 13-year payback into an 11-year payback.
Before the 0% rate: - Pre-April 2022: VAT was 5% on residential solar (reduced from 20% in 2019) - Pre-2019: VAT was 20% — solar was treated the same as any building work - The reduction to 0% was part of the government's net zero strategy
Source: HMRC; Finance Act 2022.
Check what support you actually qualify for
Most UK solar 'grants' have narrow eligibility. Find out what applies to your property — and what an installation would cost after it.
Check My EligibilityHow Long Will 0% VAT Last?
Current status (March 2026): The 0% VAT rate on residential solar and energy-saving materials is confirmed until at least 31 March 2027.
What happens after March 2027? - The government has not confirmed an extension beyond this date - The rate could: remain at 0%, revert to 5%, or change to another rate - Political pressure to maintain 0% is strong (net zero commitments, cost of living) - Industry bodies (Solar Energy UK, MCS) are lobbying for permanent 0% VAT
Should you wait? No. If the rate reverts to 5% or 20%, your installation cost increases by £250–£1,600. The savings you miss by waiting (£50–£90/month in lost generation) outweigh any risk of a small future price reduction.
Install now while 0% VAT is guaranteed. Even if VAT goes up later, your installation is locked in at 0%.
Source: Finance Act 2022; Solar Energy UK lobbying position.
What Else Gets 0% VAT?
The 0% VAT rate applies to a broader range of energy-saving materials when installed in a residential property:
- Solar panels (PV)
- Solar thermal panels
- Solar batteries / energy storage
- Heat pumps (air source and ground source)
- Insulation (loft, cavity wall, floor)
- Draught stripping
- Heating controls (smart thermostats, programmable timers)
- Wind turbines (domestic)
- Water turbines (domestic)
- Biomass boilers
- Micro-CHP (combined heat and power)
- Electric vehicle charge points
If you are installing solar alongside a battery, heat pump, or EV charger, the entire package benefits from 0% VAT.
Source: HMRC VAT Notice 708/6.
How to Verify 0% VAT on Your Quote
- Your quote should clearly state 0% VAT or 'zero-rated for VAT purposes'
- The invoice should show the VAT rate as 0% and VAT amount as £0.00
- The installer must be VAT-registered (VAT number should appear on the invoice)
- If an installer charges 5% or 20% VAT on a residential solar installation, question it — they may be making an error
- If you buy panels separately (without installation), the panels alone may be subject to 20% VAT — the 0% rate applies to the combined supply + installation service
Frequently Asked Questions
Related guides
Related: Home Heating Systems
Solar panels are most powerful when combined with an efficient heating system. Heat pumps use solar-generated electricity to heat your home at 300-400% efficiency — making them the ideal partner for solar.
Heat pump installation typically takes 2-3 days and is best planned alongside solar.
From our sister site Home Heat Pump Guide
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Check what support you actually qualify for
Most UK solar 'grants' have narrow eligibility. Find out what applies to your property — and what an installation would cost after it.
Check My EligibilityFree. We will tell you if nothing applies.