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Are solar panels VAT free?

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domestic house with black solar panels Mold North Wales

Homeowners can now benefit from 0% VAT on all solar panel installations, and the good news this VAT reduction will be around until 2027. Battery storage used to be exempt only if you installed them at the same time as solar panels, but an announcement in 2024 has now made battery storage exempt. Want to find out more about 0% VAT on solar panels?

Do you pay VAT on solar panels?

You may have seen recently the government announced a new policy on solar panels. This policy was introduced to help homeowners save on the ever increasing costs of energy by offering solar panels VAT free. Equating to roughly a 20% saving on installing solar on your home.

Solar panels are now VAT free

Prior to 23rd March 2022, all solar panel installations on domestic properties fell under a 5% VAT charge. Due to the ever-increasing cost of energy in the UK, the ex-chancellor Rishi Sunak announced the government has removed all VAT on solar panel installations for all domestic installations. Under this new policy, you can now save on any solar panel installations. This reduction of VAT remains in place until 2027, in a bid to encourage all households within the UK to adopt renewable solar energy.

As solar panels used to fall under 20% VAT, you are now saving a huge 20% on all installations. Effectively this saving can cover the cost of installation.

What about battery storage?

Well, if you decide to go for battery storage at the same time as your solar installation you can save even more. All battery storage installed at the same time as solar panels also falls under zero VAT. So not only could you be storing or selling back even more excess electricity to the grid, but you’ll also save on the initial outlay of cost.

Recently announced as of the 1st February 2024 solar battery storage will also fall under 0% VAT. So now you can chose to just add battery storage to your home and benefits from a reduction in the price. Don’t worry if you don’t have solar panels installed battery storage works as a stand alone product and can save you on your electricity bill.

Is my business eligible for 0% VAT?

No, if you own a business and are thinking about installing solar panels you are not eligible to claim 0% VAT on solar panel installs. However, businesses are eligible to claim a ‘super-deduction’ of 130% of the amount that is invested into solar panels.

As a result, for every £1 you invest in solar, you can cut your tax bill by 25p!

We also offer 5 or 7-year hire purchase options, meaning your investment could become cost-neutral or even net-positive. As the monthly HP is offset by the huge savings made thanks to your solar installation. These hire purchase options also qualify for the ‘super-deduction’.

The ‘super-deduction’ is only available until March 2023 though, so if you’re sitting on the fence, talk to us about your options today.

Can solar panels be an investment?

If you’re on the fence about solar panels, now couldn’t be a better time than any to get in touch and start building your quote. With energy prices increasing further in October to unprecedented levels, having a renewable source of energy could be the best investment you make. Not only could you lower your energy costs by generating your own power, but installing storage batteries will allow you to store any excess energy, for later use or sell back to the grid for additional income.

Ready to explore solar panels in more detail, get in touch with our friendly team who will guide you through every step of the process from quote to installation.

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