In a surprise piece of good news, the government announced last week that solar panel VAT will be scrapped until 2027. It’s something the renewables industry has been recommending for years , as a simple way to boost green generation in the UK. And for once our lawmakers have listened!
The VAT on solar PV and other energy saving materials is being scrapped from 1 April 2022 to 31 March 2027. After this period, the VAT will return to a flat rate of 5% (with none of the complex thresholds previously in place). Besides solar panels, the tax cut also includes insulation, heat pumps and turbines.
We have now had confirmation from HMRC that battery storage will be eligible for 0% VAT when installed as part of a solar installation, but remains at 20% when fitted retrospectively or on its own.
In October 2019, the VAT charged on solar panels changed from a simple 5% rate to a complex calculation of 5 or 20% depending on personal circumstances and the breakdown of the installation cost. This was allegedly to meet EU regulations, though it’s taken 2 years of industry calls since Britain left the union to reverse the change.
The government has scrapped VAT on solar panels to encourage installation of renewable energy generation, which should help lower people’s bills in the cost of living crisis, and support the country in meeting its net zero emissions commitment .
The VAT cut will obviously scrape a bit off the price of a solar panel installation, though recent months have seen material costs rising due to global shortages and increasing demand . Therefore, project costs are unlikely to be much lower than they were before the energy crisis.
We continue to experience very high levels of enquiries, and so we are currently being very selective about which projects we take on. For domestic solar projects, we will now conduct an initial roof assessment to give you a quick verdict on whether we can quote for you.
Residential projects we may pass on include:
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