Most of my videos answer a question customers ask me. This one is different. It is something I tell them, because not many people know it and it affects the price of a system.
Solar panels, battery storage, heat pumps and air conditioning fitted to your home are zero rated for VAT right now. As things stand, that ends on 31 March 2027.
What the rule actually is
Since April 2022 the installation of energy saving materials in homes has been zero rated for VAT across England, Scotland and Wales, and since May 2023 in Northern Ireland. The list includes solar panels, battery storage, air source heat pumps and insulation. From February 2024 batteries qualified on their own too, so a battery added to an existing solar system is also at 0%.
HMRC’s own guidance is clear on the end date. The zero rate runs to 31 March 2027. From 1 April 2027 the same work goes back to the reduced rate of 5%. Not 20%, as some people assume, but 5% on the whole job, kit and labour.
On a £10,000 solar and battery install that is £500. On a bigger system with a larger battery it is more. Not life changing, but it is real money for doing the same job a few months earlier.
Will the government extend it?
Possibly. In July 2026 around 40 industry bodies wrote to the Prime Minister and the Chancellor asking for the zero rate to carry on. The MCS Foundation is running a campaign for it to be extended to at least 2030. So far there has been no announcement.
My view is that if an extension was coming, the government would have made a big deal of it by now. It is a popular policy and an easy win. The silence suggests it is going to lapse, so I am planning on that basis and telling customers the same. If the Autumn Budget changes things, I will update this post.
Booking is not enough. Finished is what counts
This is the bit that catches people out. VAT is charged on the date of supply, which for an install is when the work is done and invoiced. A deposit paid in March for a job fitted in May does not lock in the 0% rate on the whole job. Only the deposit itself is at the old rate.
So if you want the zero rate, plan for the job to be complete and invoiced by 31 March 2027. That means getting the survey and the quote done well before, because every installer in the country is going to be busy in February and March. The same thing happened before the last VAT change in 2022, and lead times stretched.
What qualifies and what does not
- Solar panels and the inverter, fitted to a home. Yes.
- Battery storage, with solar or on its own. Yes.
- Air to air heat pumps, which is what most air conditioning units are, as long as they are fixed to the building. Portable units do not count.
- Air to water heat pumps. Yes, though we do not fit those.
- Business premises. No. Commercial installs are at 20% now and after March 2027.
- Bird proofing, monitoring or repairs on their own. No, these are not energy saving materials.
What I would do
If solar or a battery is already on your list for 2027, bring it forward. Get the survey done this autumn, pick a slot in the winter when installers are quieter, and have it finished by the spring. Winter is a fine time to fit solar. The panels start earning straight away and you are ready for the long days.
If you are still deciding, do not let the VAT alone push you into it. 5% is a nudge, not a reason. The reason is what the system does to your bills for the next 25 years. But if you were going to do it anyway, there is no sense paying more.
If you want a straight answer on your own house, we cover Cambridgeshire, Bedfordshire and Northamptonshire. We do a free survey and give you a clear written quote. Call 01480 400607 or read about our solar and battery installs.
Jason Pope
Owner, Selec Group