VAT on solar panels and other energy-saving materials

A zero-rate of VAT on the installation of energy-saving materials (ESMs), including solar panels, in residential accommodation, was introduced on 1 April 2022. At the time, it only applied to England, Scotland, and Wales.

Following a new agreement between the UK and the EU, the zero-rating was also implemented in Northern Ireland on 1 May 2023.

The relief is set to last until 31 March 2027. On 1 April 2027, the VAT rate on such supplies will return to 5% (the reduced rate).

Following a 2023 call for evidence, the government has extended the eligibility for the relief to include other technologies, as well as extending the eligibility for buildings used for a relevant charitable purpose.

As of September 2026, the government has not indicated that it intends to extend the VAT zero-rate beyond March 2027. The question has been asked several times in the current Parliament.

UK VAT law is consolidated in the Value Added Tax Act 1994. These changes were implemented through statutory instruments which amended the 1994 act: The Value Added Tax (Installation of Energy-Saving Materials) Order 2022, The Value Added Tax (Installation of Energy-Saving Materials) Order 2023, and The Value Added Tax (Installation of Energy-Saving Materials) Order 2024.