VAT rate on solar power generation income

What is the VAT rate for solar panels?

If the solar panels are purchased from one provider and installed by another, the higher rate is charged. Additionally, maintenance or repairs post-installation are also taxed at the standard rate. Prior to the 0% rate introduction, VAT for solar panels varied between 5% and 20%, based on specific conditions.

Do commercial solar panels cost VAT?

This means the bills paid for installing solar energy panels onto non-residential buildings will include VAT at the standard rate of 20%. Investing in a commercial solar panel installation is expensive, and many businesses opt to finance the project.

Do solar panels qualify for 0% VAT?

To qualify for 0% VAT, the solar panels must be newly purchased and installed on residential buildings. Installations must be carried out by approved installers to ensure compliance with government standards. Unfortunately, commercial properties generally do not qualify for the 0% rate.

Are solar panels VAT free?

Whether you're buying a standalone solar battery or getting a battery installed with a solar panel system, you'll benefit from the 0% VAT rate. This rule changed in February 2024 to include standalone storage batteries at the 0% VAT, regardless of whether you’re getting solar panels at the same time. Is there VAT on solar panel income?

When will the VAT rate on solar panels revert to 5%?

The zero VAT rate on solar panels is set to continue until 31 March 2027, after which it will revert to a reduced rate of 5%, aligning with the government’s long-term financial and environmental strategies.

Are solar panels tax deductible in the UK?

According to the UK government's list of Energy Saving Measures (ESMs), most solar photovoltaic (PV) panels installed on residential properties in Scotland, England and Wales (plus Northern Ireland, as of 1 May 2023) are exempt from VAT, meaning there’s no VAT included in the purchase and installation costs.