0% VAT on solar panels, and the 2027 deadline
Here's a piece of free money most people don't realise has an expiry date. Domestic solar in the UK currently carries 0% VAT, meaning you pay no value-added tax on the panels or their installation. That relief is scheduled to end on 31 March 2027, when the rate returns to 5%. It's not a huge sum, but it's a real reason not to drift indefinitely if you're already minded to install. Here's exactly what's covered and what it's worth.
What the 0% rate covers
Since April 2022, the supply and installation of solar panels on homes has been zero-rated for VAT in the UK. The relief covers the panels and the work to fit them when done together by the installer. From February 2024 it was widened so that standalone battery storage also qualifies, not just batteries fitted at the same time as panels.
The key condition is that it applies to a supply-and-install job by the same contractor. Buying panels yourself as materials only, separately from the installation, may not get the same treatment. For almost all homeowners using an MCS installer, the install is zero-rated as standard.
What it's actually worth
The relief removes the 5% reduced rate that would otherwise apply. On a typical install that's a modest but real saving:
| Install price (ex VAT) | VAT at 0% (now) | VAT at 5% (after Mar 2027) |
|---|---|---|
| £6,000 | £0 | £300 |
| £9,000 (with battery) | £0 | £450 |
| £12,000 (larger system) | £0 | £600 |
So a 2026 install on a £6,000 system avoids roughly £300 that the same job would cost after the deadline. It won't make or break the decision on its own, but it stacks with the other reasons not to wait, set out in are solar panels getting cheaper.
The 2027 deadline in context
After 31 March 2027 the rate is set to revert to 5%, not the standard 20%, so solar stays VAT-advantaged either way. The change is simply that a small saving available now disappears. Tax rules can be amended in future Budgets, so treat the deadline as the current published position rather than a certainty, and confirm it when you buy.
How it fits with other support
0% VAT is the main tax relief for solar, but it isn't the only financial support worth knowing about. The Smart Export Guarantee pays you for exported power, and there are means-tested funding routes covered in solar panel grants and funding. One common mix-up: the Boiler Upgrade Scheme grant is for heat pumps, not solar, so don't expect a grant of that kind for panels.
The detail most people miss
The relief applies to batteries now too, which quietly improves the case for adding storage before the deadline. If you were planning panels now and a battery later, doing both before 31 March 2027 keeps the whole lot zero-rated. Whether a battery pays for itself is a separate question, worked through in are solar batteries worth it, but the VAT timing is one more input to that decision.
Frequently asked questions
Not currently. Domestic solar panels and their installation are zero-rated (0% VAT) until 31 March 2027, after which the rate is set to return to 5%.
Not at present. Since February 2024, standalone battery storage also qualifies for 0% VAT, not just batteries installed alongside panels.
It's scheduled to end on 31 March 2027, reverting to 5%. As with any tax measure, this could change in a future Budget, so confirm at the point of purchase.
The relief is designed for supply-and-install jobs by the same contractor. Buying panels as materials only, separate from installation, may not qualify, so check before going the DIY route.