Zero VAT Solar Panels: Everything you need to know

0% VAT on solar panels in the UK: What you need to know

On the 23rd of March 2022, Chancellor Rishi Sunak announced that the amount of VAT charged for domestic solar panel installations would change from 5% to 0% for the next 5 years in the UK.

Find out more about this change in the amount of VAT for energy-saving home improvements by reading more below.

What does 0% VAT for home solar panels in the UK mean for me?

Simply put, customers previously had to pay 5% VAT on solar installation before the announcement on the 23rd of March 2022 when installing a domestic solar system in the UK.

To encourage more people to switch to solar power and to combat the rising cost of energy prices and living costs, the government have dropped this down to 0% VAT, potentially saving customers a lot of money when looking to add a solar panel system to their home.

This makes solar energy a much more accessible option to the average homeowner in 2022.

According to Martin Lewis, "This could result in tax savings worth £1,000 on the cost of having a solar panel installed."

Vat on solar panels explained

Smart Energy also offer a no-upfront-cost solar energy plan, which also helps customers start their solar power journey without having to find additional funds before their panel installation.

Why has the government reduced the amount of VAT you have to pay for domestic solar installations?

UK energy prices will rise a historical 54% from the 1st of April, adding an average of £798 to the average homeowner's energy bill.

For many people across the UK, these high energy bills will affect their quality of life significantly. Installing solar panels on your home can reduce these energy bill by an average of 80%, and could even get rid of your bill entirely. 

The government have therefore made these changes to the VAT for solar panels to address the crisis of the cost of living in the UK.

The government has also made these changes to solar energy in the UK to address the climate crisis and to help reach their target of net-zero carbon emissions.

What else does the VAT reduction to 0% VAT for home solar panels in the UK apply to? Are there other for energy-saving products or services that are 0% VAT applicable?

You will be able to pay the reduced rate of 0% VAT for:

  • Energy-saving hot water systems
  • Energy-saving draught savers, for example draught-proofing windows and doors 
  • Energy-saving insulation for walls, floors, ceilings and lofts
  • Energy-saving and bill-reducing solar panels
  • Energy-saving heat pumps
  • Energy-saving heat and power units
  • Energy-saving wood-fuelled boilers

Vat on solar panels explained

How long will you be able to pay only 0% VAT on home solar panels in the UK?

Smart Energy will always charge the correct rate of VAT for our solar energy installations. The reduction on VAT to zero percent will be in place for the next 5 years as the government encourages UK homeowners to move to move to solar energy.

The VAT for solar panels stood at 5%, which was already lower than the previous amount of 20%, so in effect, the VAT amount has been reduced from 20% to 0% - a great benefit for those looking to switch to solar energy in 2022!

The VAT reduction scheme for energy-saving home improvements could ensure that an extra 20% of households who previously considered solar but could not afford it, may be able to make the switch home solar energy.

Are there any other government grants apart from the 0% VAT for home solar panels in the UK?

At this time, there are no other government grants for home solar panels in the UK.

We hope that further incentives to invest in home solar energy are just around the corner, in line with other countries such as Italy, Germany, and Sweden.

For now, the new 0% VAT on home solar panels is the only government incentive available in the UK.

How do I claim the 0% VAT for home solar panels in the UK?

Smart Energy offers solar panels with 0% VAT for all of our installations, as per the UK government guidelines. Contact us today to see which solar system could be right for you and if you might also benefit from a 0% VAT solar battery.

There's never been a better time to make the switch to solar energy for your home! Avoid the 54% increase in the price of energy and get in touch with us today.

Are businesses eligible for the 0% VAT on solar panels in the UK?

zero percent vat on solar panels for businesses

No, businesses are not eligible for the 0% VAT on solar panels in the UK.

However, businesses are eligible for the 130% Tax Super-Deduction which allows businesses to claim back 130% of the amount they invest into solar panels on their taxes.

You can find more information about the 130% Tax Super-Deduction for businesses here.

Did you know that Smart Energy also install commercial solar panels? Talk to one of our commercial solar specialists for more information. This tax break is a great option for businesses looking to make the switch to solar this year.