If you’re considering investing in renewable technology for your home, there is another date worth having on your radar.
Under the current rules, the installation of qualifying energy-saving materials in homes is zero-rated for VAT until 31 March 2027. From 1 April 2027, these installations are currently due to return to the reduced VAT rate of 5%.
What currently qualifies for 0% VAT?
The relief covers a wide range of energy-saving technologies when they are installed in qualifying residential properties.
These include:
- Solar panels
- Air source heat pumps
- Ground source heat pumps
- Battery storage
- Insulation
- Central heating and hot water controls
- Smart diverters
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Battery storage was added to the list of qualifying technologies in February 2024, meaning batteries can currently qualify for 0% VAT when installed on their own as well as alongside a solar PV system.
What does the change mean for homeowners?
For now, qualifying installations can be supplied and installed without VAT being added to the price.
Under the legislation currently in place, this temporary 0% rate ends on 31 March 2027, after which qualifying installations are due to move to the reduced 5% VAT rate.
For example, on a qualifying installation costing £10,000 before VAT, a 5% rate would add £500 to the overall cost.
So, for homeowners already considering solar panels, battery storage or a heat pump, completing an installation while the current 0% VAT relief remains available could make a noticeable difference to the overall investment.
One important distinction
The VAT relief generally applies to the installation of qualifying energy-saving materials.
Simply purchasing equipment yourself does not automatically qualify for the same treatment. HMRC states that energy-saving materials supplied without installation are normally standard-rated. Where an installer supplies and installs qualifying equipment, however, both the materials and installation can fall within the relief.
What happens next?
Unless the Government changes or extends the current rules, the 0% VAT period will finish on 31 March 2027, with the reduced 5% rate applying from the following day.
There are still several months before that deadline, so there is no need to rush into an installation purely because of VAT. But if solar, battery storage or a heat pump is already something you’re considering, it’s worth factoring the deadline into your plans.
As with any renewable installation, the system itself should come first: the right technology, correctly designed for your property and how you use energy.
Source: HM Revenue & Customs, Energy-saving materials and heating equipment (VAT Notice 708/6).
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