0% VAT on Energy-Saving Materials UK 2026

The short version: there's no VAT to pay on solar panels, heat pumps, batteries and insulation installed in a UK home — a 0% rate that runs until 31 March 2027, then rises to 5% (not back to 20%). It applies automatically, to everyone, with no application — as long as one contractor both supplies and installs the kit.

Since 1 April 2022, the UK has operated a temporary 0% VAT rate on "energy-saving materials" installed in homes — a Treasury tax relief that knocks 20% off the headline price of most qualifying renewable upgrades. It's not technically a grant, but it works like one in practice: your installer charges you no VAT on the labour or materials for qualifying measures.

The headline facts

• Live now across England, Wales, Scotland, and Northern Ireland (from 1 May 2023 in NI via the Windsor Framework)
• 0% VAT on qualifying installations and the labour to install them
• Runs until 31 March 2027 — then reverts to 5% reduced VAT, not 20%
• Available to everyone — no income test, no eligibility check, no application
• Applied automatically by the installer at the point of quote/invoice

What's covered

The following are zero-rated under the relief:

• Heat pumps — air, ground and water source
• Solar PV panels and associated mounting
• Battery storage — installed with solar, retrofitted to existing solar, or standalone (added 1 February 2024)
• Wind and water turbines
• Biomass boilers in qualifying off-grid rural properties
• Insulation — loft, cavity wall, solid wall, floor
• Draught-proofing
• Heating controls — when installed with a qualifying measure (e.g. smart thermostat with a heat pump)
• Hot water cylinders when installed with a heat pump
• Smart diverters (Eddi, Solar iBoost — added 2024)
• Ground works for ground source heat pump loops

What this is worth in real money

• Heat pump install (~£13,500): saving of roughly £675 vs the 5% rate, or £2,700 vs the 20% rate
• Solar PV (~£7,000): saving of roughly £350 vs 5%, or £1,400 vs 20%
• Solar + battery (~£11,500): saving of roughly £575 vs 5%, or £2,300 vs 20%
• Loft insulation (~£600): saving of roughly £30 vs 5%, or £120 vs 20%

Important nuance: after 31 March 2027 the relief reverts to 5%, not 20%. The "cliff" between the current 0% and the post-March-2027 5% is modest — about £350 on an £8,000 install. Not catastrophic. Don't let an installer use the deadline as urgency pressure if you'd otherwise want to take more time on the project.

Why it was introduced and what's likely next

The 0% rate was introduced in the Spring Statement 2022 to accelerate adoption of low-carbon technologies in homes, alongside the Energy Saving Materials VAT Relief. It was originally a 5-year temporary measure (2022–2027). In Spring 2024 it was extended to include standalone batteries and smart diverters via The Value Added Tax (Installation of Energy-Saving Materials) Order 2024.

The Autumn 2026 Budget or Spring 2027 fiscal event will likely confirm whether the relief is extended further or allowed to revert to 5%. Industry pressure for extension is significant (Solar Energy UK, the Heat Pump Association and others actively lobby for it), and the Warm Homes Plan's renewable-heat targets depend on continued affordability. But: nothing legally binding has been announced yet.

How it's applied

1. Your installer's quote shows the price with 0% VAT
2. You don't claim anything yourself — the installer accounts for it via their VAT return
3. It applies to the labour and the materials when they're sold and installed together as a single package
4. It does not apply if you buy the materials yourself separately and install them DIY (the materials alone are 20% in that case)

Who benefits, and how much

Everyone qualifies — no income test, no eligibility check. The 0% rate is applied at the invoice level by the installer.

Practically, for a homeowner doing a typical heat pump + insulation upgrade, the saving vs the 5% rate is several hundred pounds; vs the historical 20% rate, several thousand. Stacking with BUS or Home Energy Scotland: full effect — the grants are deducted from the already-zero-rated price.

Stacking with grants

Yes — 0% VAT applies before any grant deduction. A typical worked example:

• Heat pump install before relief: £15,000 + 20% VAT = £18,000
• With 0% VAT: £15,000
• Less BUS grant (£7,500): £7,500
• Less BUS oil/LPG uplift (£9,000, from July 2026): £6,000

0% VAT on solar & energy-saving materials: FAQs

Do you pay VAT on solar panels in the UK?

No — there is a 0% VAT rate on solar panels (and battery storage) supplied and installed on UK homes. It applies automatically, to everyone, with no income test or application, and runs until 31 March 2027. After that the rate rises to 5%, not back to 20%.

Does the 0% VAT apply to a battery on its own?

Yes. Since 1 February 2024 the relief covers standalone battery storage — a battery retrofitted to an existing solar system, or installed on its own without panels. Before that date, batteries only qualified when fitted at the same time as solar.

Do I pay VAT if I buy the panels and fit them myself?

Yes — DIY purchases are charged the standard 20% VAT on the materials. The zero rate only applies when a single contractor both supplies and installs the system as one package. Buying the kit at retail and self-installing does not qualify.

Is the 0% VAT available in Scotland and Northern Ireland?

Yes — it is UK-wide. It launched across Great Britain on 1 April 2022 and was extended to Northern Ireland from 1 May 2023 under the Windsor Framework. Scottish and NI homeowners get the same 0% rate, and can stack it with their own national grants and loans.

Does 0% VAT apply to solar on a business or commercial property?

No. The relief is for residential property only. Solar or battery installs on business premises, warehouses and offices are charged the standard 20% VAT. Homeowners, residential landlords, and charities using a building for non-business purposes get the 0% rate.

When does the 0% VAT end, and what replaces it?

The zero rate is funded until 31 March 2027, then reverts to a 5% reduced rate — not the full 20%. On an £8,000 install that is roughly a £350 difference, so the deadline is a modest incentive rather than a cliff. Whether it is extended will likely be decided at the Autumn 2026 Budget or a Spring 2027 fiscal event.

How do I claim the 0% VAT — is there a form?

There is nothing to claim. The 0% rate is applied by your installer at the quote and invoice stage — it shows as a price with no VAT added — and they account for it on their own VAT return. You do not apply to HMRC or reclaim anything yourself.