Are Solar Panels VAT Exempt?

In Great Britain, from April 1st, 2022 until March 31st, 2027, solar panels and several other energy-saving material installations are temporarily zero-rated for VAT, but only for installation in residential properties. After March 31st, 2027, the VAT rate will revert to a reduced rate of 5%. If the energy-saving materials are not supplied by the installer, these materials will be standard-rated for VAT.

In Northern Ireland, the reduced VAT rate of 5% will continue for the installation of solar panels and other specific energy-saving materials, subject to certain restrictions for installations on residential accommodation.

Zero-rated energy-saving materials in Great Britain include solar panels, wind and water turbines, ground source heat pumps and air source heat pumps, insulation materials, micro combined heat and power units, wood-fuelled boilers, central heating and hot water system controls, draught stripping and excluders. It is important to note that not all energy-saving materials are zero-rated for VAT, and eligibility criteria can be complex.

VAT rules can change frequently, and it is essential to understand your VAT status to avoid penalties and ensure you can claim back VAT on costs where applicable. For further advice on VAT matters, it is recommended to seek the guidance of a specialist VAT team or consult with the gov.uk website for more information.