Solar Panel VAT in April 2027: What Actually Changes, and What It Costs You
Solar Panel VAT in April 2027: What Actually Changes, and What It Costs You
The short version
The 0% VAT rate on home solar and battery installs ends on 31 March 2027. From 1 April it goes to 5% — not 20%, whatever you’ve read. On a typical 4kW system that’s about £300 extra; on solar plus a battery, £500 to £600. New builds and self-builds aren’t affected. The Chancellor could still extend it at the Budget on 28 October, and until he does, 5% is the law.
I’ve been fielding the same question since about June. A reader gets a quote, spots “VAT 0%” on the bottom line, and asks me whether they’re about to lose twenty per cent of it. The short answer is no. The longer answer involves a deadline that’s genuinely real, a myth that won’t die, and a Budget five days from now that could make half of this article redundant.
So let’s do it properly. Here’s what the April 2027 change actually is, what it costs on a real quote, and the handful of situations where it doesn’t apply to you at all.
2027Last day of the 0% rate
What actually changes on 1 April 2027
Since 1 April 2022, fitting solar panels to a home in Great Britain has carried a zero rate of VAT. Northern Ireland joined on 1 May 2023, once the Windsor Framework made it possible. Battery storage, smart diverters and water-source heat pumps were added on 1 February 2024.
That zero rate was always temporary. HMRC’s VAT Notice 708/6 puts it plainly: the zero rate covers installations made between 1 May 2023 and 31 March 2027, and from 1 April 2027 these revert to the reduced rate of 5%.
That’s it. One sentence of guidance, one date, one new number. It isn’t a scheme that closes, there’s no application to get in before, and nothing is withdrawn from anyone who already has panels. It’s a tax rate changing on a Thursday.
What it covers is wider than most people realise. The relief applies to the installation of a whole list of kit — insulation, draught stripping, heating controls, solar panels, wind and water turbines, ground, air and water source heat pumps, micro-CHP, wood-fuelled boilers, electrical storage batteries and smart diverters. For a solar job that means the panels, the mounting system, the cabling, the inverter and the labour all sit at 0% on one invoice. All of it moves to 5% on the same day.
No, it isn’t going to 20%
This is the bit I want to be blunt about, because the wrong number is everywhere — on installer blogs, in schema markup, and in at least one FAQ I read last week that said 5% in the body text and 20% in the structured data underneath it.
Domestic solar did not sit at 20% before April 2022. It sat at 5%. The reduced rate for energy-saving materials has been part of UK VAT law for years, and the zero rate was a temporary five-year holiday from it. On 1 April 2027 the holiday ends and we go back to where we were.
Rates per HMRC VAT Notice 708/6. The dashed bar is the standard rate, shown for scale only — it has never applied to a domestic supply-and-fit solar job.
Why does the 20% story keep spreading? Because “save 20% before the deadline” is a better sales line than “save 5% before the deadline”, and a lot of the content on this topic is written by people selling panels. Be a bit careful with any page that leads on the bigger number — it’s usually a tell.
What 5% actually adds to your bill
Here’s the arithmetic on real UK prices. These are typical installed figures for 2026 from our solar panel cost guide and battery retrofit guide, with 5% applied to the same pre-VAT price.
| The job | Price now (0%) | Same job at 5% | VAT added |
|---|---|---|---|
| 4kW solar only | £5,500–£7,500 | £5,775–£7,875 | £275–£375 |
| 5kWh battery retrofit | £3,500–£4,500 | £3,675–£4,725 | £175–£225 |
| 10kWh battery retrofit | £6,500–£8,000 | £6,825–£8,400 | £325–£400 |
| 4kW solar + 5kWh battery | £9,000–£11,500 | £9,450–£12,075 | £450–£575 |
| 6kW solar + 10kWh battery | £11,000–£14,000 | £11,550–£14,700 | £550–£700 |
So: three hundred quid on a straightforward panel job, nearer six or seven hundred on a full solar-and-battery package. Real money, and worth having. But it is not the difference between solar making sense and not making sense, and anyone telling you it is has something to sell.
Put it against the rest of the numbers. A typical 4kW system takes seven to twelve years to pay back. Adding 5% VAT pushes that out by roughly four to seven months. Meanwhile the gap between two quotes from two different installers for the same job routinely runs to £1,000 or more — three times the VAT change, and entirely within your control.
If you get one thing from this article, make it this: a third quote is worth more than the deadline. I’d rather you install in May 2027 at 5% having compared three MCS-certified firms properly than in March at 0% having signed the first thing put in front of you.
Could the Budget change it?
It could, and the timing is unusually tight. Chancellor John Healey delivers the Autumn Budget on Wednesday 28 October 2026 — five days after this article goes up — and the zero rate is sitting there as a live decision with about five months left to run after that.
Here’s what we know rather than what people are guessing. In September, Max Wilkinson, the Liberal Democrat MP for Cheltenham, asked the Treasury what assessment it had made of extending the VAT relief on domestic renewables beyond March 2027. The answer came back on 8 September from Treasury minister James Murray, and it was a restatement rather than a hint: qualifying installations benefit from a temporary zero rate until March 2027, after which they revert to the reduced rate of five per cent, and the support is worth over £1 billion.
The House of Commons Library, reviewing the position again in its briefing on VAT and energy-saving materials, says the same thing: as of September 2026 the government has not indicated it intends to extend the zero rate beyond March 2027, and the question has been raised several times in this Parliament.
“Worth over £1 billion” is a cost, and costs get looked at hard in a Budget where the Chancellor has ruled out raising the main rates of income tax, National Insurance and VAT. That cuts both ways — it’s expensive to keep, but it’s also a politically awkward thing to let lapse while you’re cutting VAT on electricity bills. Nobody outside the Treasury knows which way it goes on the 28th.
My read, and it is only a read: an extension is plausible but not the base case. A government that has just taken VAT off electricity to help with bills would look odd putting VAT back on the thing that reduces them. But the relief has an end date written into law, a minister restated that end date six weeks ago, and nothing has been trailed. Plan for 5%. Treat an extension as a bonus.
The other VAT cliff on the same day
This one almost nobody has joined up, and for solar owners it matters.
On 1 October 2026 the government removed VAT from household electricity bills entirely, dropping the rate from 5% to 0%. DESNZ puts the saving at around £45 a year for a typical household. It applies automatically, including on fixed tariffs and prepayment meters, and it covers electricity only — gas stays at 5%.
That cut was funded for the 2026–27 financial year. Which means it ends on 31 March 2027 too — the same night the solar relief does.
So on 1 April 2027, as things stand, two things happen at once. Installing solar gets 5% dearer. And buying electricity from the grid gets about 5% dearer as well. The second one quietly improves the case for the first: every unit you generate and use yourself is displacing a unit that just went up in price. It doesn’t cancel out the VAT on your install — but it does mean the “solar gets worse in April 2027” framing is only half the picture.
One regional note: the electricity zero rate applies in Great Britain only. Northern Ireland households stayed on 5% for electricity throughout. The solar installation relief, by contrast, does cover Northern Ireland, and ends there on the same date.
What qualifies — and the two traps that catch people
The relief is narrower than the headlines suggest, and the limits matter more as the deadline approaches.
Trap one: buying panels without installation
The zero rate applies to installing energy-saving materials, and to materials supplied by the person installing them. Buy a panel from a retailer and carry it home yourself and that sale is standard-rated at 20% — it always has been, zero rate or not. People planning a DIY array are sometimes shocked by this. The relief was never a discount on hardware.
There is a useful wrinkle the other way. If you buy the kit yourself and then pay a firm to fit it, their installation service does qualify for the relief. You’ll have paid 20% on the goods and 0% on the labour. Worth knowing if you’ve already got panels sitting in a garage.
Trap two: bundling solar into bigger building work
This is the expensive one. When several things are done together as one job, VAT law asks whether that’s a single supply or several. If it’s single, the dominant element sets the rate for everything.
HMRC’s own example is insulating a new extension: building an extension is standard-rated, the insulation is part of building it, so the whole lot is 20%. Translate that to solar and you can see the risk — a re-roof with panels fitted as part of the same contract, one price, one invoice, could be treated as a standard-rated roofing job with solar attached rather than a zero-rated solar install.
Keep the solar separate: its own contract, its own quote, its own invoice, ideally its own visit. HMRC’s indicators for separate supplies are separate pricing and invoicing, items available separately, a time gap, and elements that aren’t interdependent. If a builder offers you “roof and panels, one price”, ask them to split it and to confirm the VAT treatment in writing before you sign.
What’s in scope
Beyond panels and batteries, the relief covers heat pumps (air, ground and water source, including the groundworks for ground and water source), insulation, draught stripping, heating and hot water controls, wind and water turbines, micro-CHP, wood-fuelled boilers, and smart diverters retrofitted to an existing system. If you’ve been weighing up a solar diverter, it’s in.
“Residential accommodation” is broader than a standard house, too. It takes in self-catering holiday lets, park homes and static caravans used as permanent habitation, houseboats and canal boats that are someone’s main residence and pay council tax, student accommodation and religious communities. It does not take in hotels, hospitals or prisons — those are standard-rated.
“I’ve paid a deposit” — the date that actually counts
Every rate change produces the same question, and almost nobody answers it properly. Signing a contract before 31 March 2027 does not, by itself, fix your VAT rate.
VAT is set by the tax point — the date the supply is treated as taking place for tax purposes. For a service like an installation, the basic tax point is when the work is completed. But an earlier, actual tax point is created if the installer issues a VAT invoice or receives a payment first. That’s why a deposit matters: paying one normally creates a tax point on the day it’s received, for that amount.
In practice, for a job straddling 1 April 2027:
- A deposit paid before the change is normally taxed at the rate in force when it was received — so 0%.
- The balance, invoiced or paid after the change, can fall at the new rate — so 5%.
- An installer who invoices the full amount before the change creates a tax point then, for the lot.
- There are also rules letting a supplier elect how to treat a supply that spans a rate change, which can shift the outcome either way.
I’m not your accountant and this is one of the fiddlier corners of VAT, so don’t take a forum post’s word for it — including mine. What I’d do is simple: before paying anything, ask the installer in writing which rate they will charge on the balance if the job slips past 31 March, and get that in the contract. A firm that can’t answer that question clearly in October 2026 is a firm I’d think twice about.
A UK solar install is quick once it starts, but the queue in front of it isn’t — survey, scaffolding, DNO paperwork. G98 notification covers inverters up to 3.68kW on a single-phase supply; anything bigger needs G99 approval before you connect, and those take weeks. If you’re booking in February 2027 for a March slot, you have very little room. Ask for the install date in writing, not “early spring”.
Who isn’t affected at all
| Your situation | What happens on 1 April 2027 |
|---|---|
| Existing solar owner | Nothing. The relief applies to installation. Panels already on your roof are unaffected, and so are your export payments. |
| Buying a new build | Nothing. Solar fitted during construction of a new dwelling is zero-rated under the separate new-build rules, which have no end date. |
| Self-building | Largely nothing. New dwellings are zero-rated, and you reclaim VAT on qualifying materials through HMRC’s DIY housebuilders’ scheme. It’s later retrofit work that’s exposed. |
| Business or commercial roof | Nothing. Commercial installs have been at 20% throughout — though a VAT-registered business can usually reclaim it. |
| Getting ECO4 or Warm Homes funding | Little or nothing, if the scheme is covering the cost. VAT changes what the work costs, not whether you qualify. |
| Northern Ireland homeowner | Same as Great Britain. The zero rate started later (1 May 2023) but ends on the same date. |
If you’re buying or building new, the thing to read instead is our guide to self-building after March 2027 — because there’s a second, completely different March 2027 solar deadline, and the two get mixed up constantly.
Two deadlines, a week apart
This confusion is going to get worse over the next year, so let’s separate them now.
Different rules, different places, different people affected. Only the second one changes what a retrofit costs.
The 24 March date is Requirement L3 of the Building Regulations in England, which makes on-site renewable generation compulsory on new homes. It’s a planning and construction rule. The 31 March date is a tax rate. If you own an existing house and you’re thinking about panels, only the second one is yours to worry about.
Should you rush? My honest take
Twenty years in this industry has taught me that deadlines make people buy badly. So here’s the balanced version, which you won’t get from an installer with a Q1 slot to fill.
Reasons to get on with it
- The saving is free money if you were going ahead anyway. Nothing to apply for, no means test — it’s just the rate on the invoice.
- Lead times are long and getting longer. Survey, DNO paperwork and scaffolding all queue up ahead of the actual install. February is too late to start if March is your target.
- A battery retrofit is the cleanest case. If you already have panels and have been putting off storage, doing it before the deadline saves you a couple of hundred pounds on a decision you’d already half made.
Reasons not to panic
- It’s 5%, not 20%. On a straightforward panel job that’s £300-odd. Shopping around properly saves more.
- Deadline crunches push prices up. I’d expect quotes to firm up through Q1 2027 as diaries fill. A 5% saving on a price that’s drifted up 5% is no saving at all.
- Rushed jobs are where the cowboys live. Every artificial deadline in this sector brings out doorstep sales and “today only” pricing. Our red flags guide is worth five minutes before you let anyone in.
- The Budget might move it. If you’re genuinely undecided, there’s no harm in seeing what lands on 28 October before you sign anything.
Already decided on solar, or on adding a battery to a system you’ve got? Start getting quotes now — not because of the tax, but because booking a good MCS-certified installer takes time, and the 0% rate is a decent bonus on the way through. Still unsure whether solar suits your roof at all? Don’t let a £300 tax change decide a £7,000 purchase. Work out whether the system is right first. The VAT is a rounding error next to getting that wrong.
You can run your own numbers with our VAT and grant savings checker, and it’s worth cross-checking what else you might be entitled to in our 2026 grants guide — ECO4 in particular closes at the end of this year, which is a much harder deadline than this one.
Frequently asked questions
When exactly does 0% VAT on solar panels end?
The zero rate runs to 31 March 2027. From 1 April 2027, HMRC’s VAT Notice 708/6 says installations of energy-saving materials revert to the reduced rate of 5%. The same date applies to battery storage, heat pumps and insulation, and it applies across Great Britain and Northern Ireland.
Will solar panel VAT go up to 20% in April 2027?
No. The rate goes to 5%, not 20%. Domestic solar sat at the 5% reduced rate before the zero rate arrived in April 2022, and that is the rate it returns to. The 20% standard rate applies to commercial installations and to panels you buy without installation, and it always has.
If I pay a deposit before April 2027, do I still get 0% VAT?
Not automatically. VAT is fixed by the tax point, not the date you signed. A deposit normally creates a tax point when the installer receives it, so that part of the job is usually charged at the rate in force on that day. The balance can fall at the later rate if it is invoiced or paid after the change. Ask your installer to confirm in writing how they will handle it.
The Budget is on 28 October. If the Chancellor extends the zero rate, I’ll update this page the same day — and if he doesn’t, the 31 March date stands and everything above holds. Either way, don’t let anyone sell you a system on the strength of a tax deadline alone.
