VAT on sales of photovoltaic panels

Are solar panels subject to VAT?

This guidance sets out the VAT treatment of the supply and installation of solar panels. The supply of solar panels is subject to the standard rate of VAT. However, the reduced rate or zero rate may apply when solar panels are supplied and installed as part of a supply and install contract.

What is the VAT rate on solar panels?

The 0% VAT rate on solar panels will last until the 1st of April 2027. After that, VAT on solar panels will increase to 5% – meaning it won’t go back to the 20% rate. You won’t need to meet the pre-April 2022 criteria to qualify for the reduced rate either. The 5% VAT rate will apply to solar panels being installed on any residential property.

Can VAT be reduced on solar panels?

For example, Austria just recently reduced VAT to 0% on residential solar panel installations in January 2024. According to the latest data from Microgeneration Certification Scheme (MCS), over 1.4 million solar panel systems have been installed across the UK, up from 1.2 million in 2022.

Do you pay VAT on solar batteries?

That means you still had to pay 20% VAT on solar batteries that were installed as a stand-alone product, or retrofitted onto an existing solar panel system. Luckily, the government has now added solar batteries to their list of energy-saving products that qualify for 0% VAT, regardless of what they’re installed alongside of.

Do solar batteries qualify for 0% VAT?

Luckily, the government has now added solar batteries to their list of energy-saving products that qualify for 0% VAT, regardless of what they’re installed alongside of. Like solar panels, solar storage batteries can reduce both energy bills and carbon emissions by storing excess electricity produced from the panels, to be used later.

How much does a 0% VAT Solar System cost?

The 0% VAT rate has made solar panels slightly cheaper, but not by much. For example, under the old 5%–20% VAT rate, a 3.5 kilowatt peak (kWp) solar PV system (suitable for a three-bedroom house) would cost around £7,860 in 2022. Under the current rate of VAT, that same system would cost around £7,026.