Do Solar Panels and Heat Pumps Qualify for 0% VAT?
Yes, in many cases, solar panels and heat pumps currently qualify for 0% VAT in the UK when installed in residential properties.
This temporary government relief is in place until 31 March 2027 and is designed to support households making energy efficiency improvements
What does the 0% VAT scheme cover?
The 0% VAT rate applies to a defined group of energy-saving materials, including:
- Solar photovoltaic (PV) panels
- Air source and ground source heat pumps
- Insulation (such as loft, cavity wall, or solid wall insulation)
- Biomass boilers
- Some heating controls and associated equipment
These measures must usually be supplied and installed together as part of the same job.
What is not covered?
Not all energy-efficient products are covered.
For example, standalone appliances such as:
- Fridges
- Washing machines
- Tumble dryers
do not qualify for 0% VAT, even if they have high energy efficiency ratings.
In addition, if you purchase materials separately without installation, the standard VAT rate may still apply.
When does the 0% VAT rate apply?
In most cases, the reduced VAT rate applies where:
- The work is carried out on a residential property
- The installation is completed by a VAT-registered installer
- The supply and installation form part of a single contract
There are some exceptions, so it’s worth confirming the details with your installer before proceeding.
How much difference could it make?
VAT is usually charged at 20%, so a 0% rate could reduce the upfront cost of installation.
For example:
- A system costing £8,000
- With standard VAT: £9,600
- With 0% VAT: £8,000
Actual costs will vary depending on the type of system, property, and installation requirements.
Will solar panels or heat pumps reduce energy bills?
Installing energy-saving measures may help reduce energy use over time, but the impact will depend on several factors, including:
- The type and condition of your property
- Existing insulation levels
- Your energy usage patterns
- The system installed and how it is used
Because every home is different, outcomes can vary.
Why the government introduced this scheme
The 0% VAT relief is part of a wider approach to:
- Encourage improvements in home energy efficiency
- Support lower-carbon heating systems
- Reduce overall energy demand
For households, it may make certain upgrades more accessible by lowering initial costs.
What to consider before installing
Before going ahead, it may be useful to:
- Check whether your planned installation qualifies for 0% VAT
- Confirm what is included in your installer’s quote
- Compare different systems and suppliers
- Understand what is suitable for your specific property
We recommend that you carry out a retrofit assessment to find out which works are suitable for your home and budget.
