VAT on solar panels in the UK depends on the type of purchase and the type of property. In many home installs you can get 0% VAT, but that is not automatic for every scenario.
You can usually pay 0% VAT if you buy and install solar panels as an energy-saving measure (ESM) at a residential property.
In practice, 0% VAT often applies when:
You use a VAT-registered installer.
The installer supplies the system and installs it under one contract.
The installation is at an eligible building, such as your home.
The 0% rate can cover more than the panels. It can also cover key parts of the system that make it work as an electricity generator for your property.
HMRC sets the VAT rules. If you want to check the source, read the guidance on energy-saving materials on GOV.UK.
You might still see 5% VAT or 20% VAT on some quotes. Common reasons include:
Supply-only purchases (you buy the equipment with no install). These normally attract 20% VAT.
Non-domestic buildings (many commercial installs). These often sit at 20% VAT, unless a specific relief applies.
Work that is not treated as an ESM install under the VAT rules.
Mixed-use buildings where only part of the building is residential.
The 5% rate may appear in older guidance and in edge cases, but for most typical home solar installs you should expect to see 0% VAT on the full supply-and-install invoice if you qualify.
Eligibility matters as much as the kit you pick. Two neighbours can buy similar systems and still get different VAT treatment if the building type or contract structure is different.
You will usually qualify for 0% VAT if:
The system is installed at your main home.
The system is installed at a residential annex.
The system is installed at certain residential accommodation types.
For a standard house installation, your installer will normally apply 0% VAT without you doing extra work. Still, you should ask the installer to confirm in writing that they will invoice at 0% VAT and why.
A solar PV system is more than panels. You will also see items like an inverter, mounting, cabling, isolators, and monitoring.
0% VAT can apply to battery storage in many cases, including:
A battery fitted as part of a solar PV install.
A battery added to an existing solar PV system, if the work meets the conditions.
Other associated equipment can also fall under the same VAT treatment when it is supplied and installed as part of the eligible works. Your invoice should be clear about what is included.
If you are adding extras, ask direct questions:
“Is the battery invoiced at 0% VAT?”
“Is it supplied and installed under the same contract?”
“Does the invoice treat the inverter and all electrical works as part of the solar PV install?”
New build rules can change the VAT picture.
If you install solar panels on a new build that already has a VAT relief on the build work, VAT treatment can differ from a simple retrofit on an existing home.
Extensions and major renovation projects can also create confusion because you may have:
One contractor doing general building work.
Another contractor doing the solar PV work.
Different VAT rates across different parts of the project.
The safe approach is simple: treat the solar PV as its own package and ask your solar installer to confirm the VAT rate they will apply for your specific property type and project timing.
Answer a few quick questions, and we will send you a bespoke solar panel quote.
VAT on solar panels is often less straightforward once you move away from a single domestic home.
If you install solar panels for a business site, you may see 20% VAT charged.
If your business is VAT-registered, you may be able to reclaim VAT on the purchase, subject to the normal VAT rules and evidence requirements. The key points are:
You usually reclaim VAT through your VAT return.
You need valid VAT invoices.
Partial exemption rules can apply if you have exempt sales.
If you plan to export power and sell it, you should also think about the income side. Export payments can affect your business energy plan, but they do not remove the need to get VAT right on the purchase.
As a landlord, the VAT rate depends on the building type and how the property is used.
Typical scenarios include:
Single dwelling let as a home: your installer may be able to apply 0% VAT, subject to the ESM rules.
House in multiple occupation (HMO): often treated as residential use, but you should confirm facts with your installer.
Shop with a flat above (mixed-use): the split between residential and commercial areas can affect VAT.
If you own a mixed-use building, ask for a quote that clearly states:
Where the system is installed.
Which meters it will connect to.
Whether the installer is applying one VAT rate or a split rate.
Community energy projects can also sit outside standard domestic rules. If you are part of a group install, you should ask the project lead how VAT is being handled and whether the contracting structure affects the VAT rate.
Buying solar panels online can look cheaper, but VAT can flip the maths. The VAT rules also become stricter because the supplier is not responsible for the install.
A supply-and-install contract is the common route for 0% VAT in domestic settings.
A supply-only purchase usually attracts 20% VAT, even if the equipment is identical to what an installer would supply.
If you plan to buy panels, an inverter, and a battery yourself, you should assume:
You will pay 20% VAT at checkout.
You may still pay an installer for labour later.
You may end up paying more overall once you include design, certification, and any remedial work.
DIY can cause problems that go beyond VAT. The most common issues are practical:
Wrong system design (string sizing, inverter limits, shading losses).
Missing paperwork (warranties linked to approved installers, commissioning sheets).
Grid connection steps that are skipped or done late.
Evidence gaps on what was supplied, what was installed, and by whom.
Even if you hire an electrician after a supply-only purchase, the invoice structure may not match the VAT conditions for 0% VAT on the equipment. If you want the simplest VAT outcome, you usually need one installer to supply and install the full system.
You do not need to be an accountant to check VAT on solar panels. You just need an itemised quote and a few clear questions.
Before you accept a quote, check these line items:
A clear VAT rate shown as 0%, 5%, or 20%.
A VAT amount that matches the stated rate.
One bundled “supply and install” scope, or a clear explanation if the quote splits labour and materials.
You should also look for red flags:
The quote shows 0% VAT but includes separate “equipment supply” lines that look like a retail sale.
The quote shows 20% VAT with no explanation for a standard home install.
The quote applies different VAT rates without stating the reason.
If something looks off, ask one direct question: “Which VAT relief are you applying, and why does my install qualify?”
Your installer should keep records to support the VAT rate they applied. You should also keep your copy, because it helps if you sell your home or if you query the invoice later.
Useful paperwork includes:
The signed quote or contract.
The final VAT invoice showing the VAT rate.
A short statement from the installer confirming the job is an eligible energy-saving install at a residential property.
If you are unsure, you can cross-check general VAT guidance on GOV.UK. For case-specific advice, you may need a tax adviser, because small facts can change VAT treatment.
Answer a few quick questions, and we will send you a bespoke solar panel quote.
VAT changes your upfront cost, so it also changes your payback period. A 20% VAT bill can add years if your export income is modest.
Here is a simple example using round numbers.
Assume you get a quote for a home solar PV system:
System price before VAT: £8,500
Same equipment and labour in both cases
Case A: 0% VAT (eligible supply-and-install)
VAT at 0%: £0
Total price: £8,500
Case B: 20% VAT (common with supply-only, or non-eligible work)
VAT at 20%: £1,700
Total price: £10,200
That £1,700 difference is real money. If your system saves and earns, say, £600 per year through lower imports plus export payments, then:
Payback on £8,500 is about 14.2 years.
Payback on £10,200 is about 17.0 years.
Your numbers will differ, but the point holds: VAT treatment can shift payback by years.
Export income usually comes through the Smart Export Guarantee (SEG) or an export tariff offered by your supplier.
VAT does not change your export rate, but it does change the starting line.
To think clearly about it, separate the inputs:
Upfront cost: changes with VAT.
Import savings: depend on your self-use rate, your battery, and your unit price.
Export payments: depend on your export meter readings and your tariff.
If you use a battery, you may export less in summer because you store more for evening use. That can reduce export income, but it can increase bill savings. The best setup depends on your usage pattern.
If you want to compare quotes, ask each installer to show:
Estimated annual generation (kWh).
Estimated self-use percentage.
Assumed import unit price and export unit price.
VAT rate and total installed cost.
This makes VAT on solar panels part of a clean comparison instead of a surprise at invoice stage.
VAT on solar panels is often 0% in the UK when they’re supplied and installed as an energy-saving measure at an eligible residential property. In practice, this usually means a VAT-registered installer provides the system and installs it under one supply-and-install contract for your home.
You’ll commonly see 20% VAT where it’s a supply-only purchase (buying panels online without installation), or where the building is non-domestic (many commercial sites). Mixed-use buildings and work not treated as an eligible energy-saving installation can also trigger standard-rate VAT on all or part of the job.
Often, yes. VAT on solar panels at 0% can extend to associated equipment that makes the system work, such as inverters, mounting and electrical works. Battery storage may also qualify at 0% when fitted as part of a solar PV install, or when added later if the conditions are met.
Ask for an itemised quote showing the VAT rate (0%, 5% or 20%) and the VAT amount, and check it matches. For many homes, a single “supply and install” scope is key. If anything looks off, ask: “Which VAT relief are you applying, and why does my install qualify?”
Often they can, but it depends on normal VAT rules. Commercial installs may be charged at 20% VAT, and a VAT-registered business can typically reclaim it via the VAT return if it has valid VAT invoices. If the business makes exempt sales, partial exemption rules may limit recovery.
Usually not. Supply-only purchases typically attract 20% VAT even if you later pay an installer for labour. The 0% VAT outcome generally relies on one VAT-registered installer supplying and installing the system under a single contract, with clear paperwork showing it qualifies as an energy-saving measure.
