0% VAT on Solar Panels: What Qualifies?

Since April 2022, solar panel installations on residential properties in the UK have been zero-rated for VAT. This means you pay 0% VAT instead of the standard 20% — a saving of hundreds or even thousands of pounds. Unlike means-tested grants, this applies to everyone. Here's what qualifies and what to watch out for.

What Changed in April 2022?

Before April 2022, residential solar installations were charged VAT at the reduced rate of 5% (which itself was a concession — the standard rate is 20%). In the Spring Statement 2022, the government announced that VAT on energy-saving materials installed in residential properties would be reduced to 0% for five years, from 1 April 2022 to 31 March 2027.

This was a significant change. On a £7,000 solar installation, the difference between 5% VAT (£350) and 0% VAT is a £350 saving. Compared to the old 20% standard rate, the saving is £1,400.

What Qualifies for 0% VAT?

Eligible Equipment

• Solar PV panels
• Solar thermal panels (for hot water)
• Battery storage systems (when installed alongside solar or standalone)
• Inverters
• Mounting hardware
• Wiring and connection equipment
• Wind turbines
• Heat pumps
• Insulation
• Draught stripping
• Heating controls
• Hot water system insulation
• Ground source and water source heat pumps

Eligible Properties

• The installation must be on a residential property (your home)
• It applies to owner-occupied, rented, and second homes
• The property must be used for residential purposes — not solely commercial
• It applies across the entire UK (England, Scotland, Wales, and Northern Ireland)

Eligible Installers

The zero-rating applies when the supply and installation are carried out by the same VAT-registered business. If you buy panels separately and hire someone to fit them, the VAT treatment may differ.

What Doesn't Qualify?

Commercial Properties

If you're installing solar on a business premises, the zero-rating doesn't apply. Standard 20% VAT is charged. However, VAT-registered businesses can reclaim VAT through their normal VAT return.

Supply-Only (No Installation)

If you buy solar panels or batteries on their own — without installation — the standard VAT rate of 20% applies. The zero-rating specifically covers the combined supply and installation of the equipment.

This is relevant if you're considering a DIY solar installation. The panels themselves will carry 20% VAT when purchased separately. Installation by a VAT-registered business is what triggers the zero-rating.

Post-March 2027

The zero-rate is currently legislated until 31 March 2027. After that date, it could be extended, made permanent, or revert to the reduced rate of 5%. The government has not yet confirmed what happens after March 2027.

How Much Does It Actually Save?

Here are the real numbers for typical systems:

These savings apply to every homeowner, regardless of income. You don't need to claim anything or fill in any forms — the installer simply charges 0% VAT on the invoice.

Battery Storage and VAT

Battery storage qualifies for 0% VAT in two scenarios:

1. Installed at the same time as solar panels — Both are zero-rated as part of the same installation
2. Installed as a standalone retrofit — Batteries installed on their own (without solar) are also zero-rated since the March 2023 clarification

This is worth knowing if you already have solar panels and want to add a battery later. The battery and its installation will be VAT-free.

EV Chargers and VAT

Electric vehicle chargers are not currently covered by the zero-rate for energy-saving materials. EV charger installations are charged at the standard 20% VAT rate. This catches some people out because chargers often feel like part of the same "green energy" package as solar and batteries.

If an installer is fitting solar panels and an EV charger in the same job, the solar portion should be zero-rated and the EV charger portion should be at 20%. Make sure these are itemised separately on the invoice.

Historical Context: Feed-in Tariff Era

Before the zero-rate was introduced, solar installations carried 5% reduced VAT (since 2001). This was already more favourable than the 20% standard rate, but the move to 0% in 2022 made a meaningful further difference.

Combined with the fact that solar panel costs have fallen dramatically over the past decade, the overall affordability of residential solar has never been better.

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Key Takeaways

• Every residential solar installation should be quoted at 0% VAT
• This applies regardless of your income, property type, or location in the UK
• Batteries also qualify, whether installed with solar or on their own
• The zero-rate runs until March 2027 — install before then to guarantee the saving
• Always check that your quote explicitly shows 0% VAT

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