UK Solar VAT 2027: 0% to 5% and Tax Points for Installers

What Is Changing

Since 1 April 2022 the installation of energy-saving materials in Great Britain has been zero-rated for VAT, and Northern Ireland joined on 1 May 2023. Standalone batteries were added on 1 February 2024. HMRC's guidance, VAT Notice 708/6, says the zero rate runs to 31 March 2027, and from 1 April 2027 these installations move to the reduced rate of 5%.

That is a five point change, not the jump to 20% that some pages suggest. On a £10,000 installation, 5% adds £500.

The Autumn Budget on October 28, 2026 was the last realistic point for an extension. Trade reports quoting the Budget document say the government will revert to the reduced rate on energy-saving materials as planned. The House of Commons Library said in September that the government had not indicated any extension.

A second VAT relief ended up in the same news: the zero rate on household electricity bills, which the Budget extended to June 30, 2027. That is a separate relief and does not change the rate on installations.

What the Relief Covers

HMRC's relief applies when a contractor supplies and installs the materials, or installs materials the customer bought. If materials are sold without installation, the sale is standard-rated at 20%. The zero rate applies to installations in qualifying residential accommodation and some buildings used for a charitable purpose, so a commercial premises job is usually taxed at 20%. Check the conditions in Notice 708/6 before quoting a non-domestic job at 0%.

How the Tax Point Decides the Rate

VAT is charged at the rate in force on the tax point, the date a supply is treated as taking place. For installation work, the basic tax point is the date the work is completed. Two things can move it:

• An earlier actual tax point. If you issue a VAT invoice or receive a payment before the work is completed, that creates a tax point for the amount invoiced or paid.
• The 14 day rule. If you issue the VAT invoice within 14 days after completion, the invoice date becomes the tax point.

HMRC's guidance adds that no change of rate normally applies to a supply with a tax point before the effective date of the change. For a rate that goes up, it also says you can charge tax at the old rate on goods removed or services performed before the change, even when the tax point falls later because of when the invoice is issued.

Two cautions apply. The change of rate treatment is an option for the supplier, not an automatic rule, and whether a single install counts as a continuous supply is a question for HMRC or an adviser. And dates must be real: an invoice date has to match when the invoice was actually issued.

What Installers Should Do Before 31 March

• Show the VAT treatment on every quote, including what happens if completion slips past 31 March.
• Keep completion evidence, such as the handover pack and customer sign-off, with the date. The completion date can decide the rate.
• Decide your deposit policy. A deposit taken before 31 March fixes 0% on that amount, but only the amount paid or invoiced.
• Plan the calendar. Jobs signed in the new year have less room to finish before the date, so crew and equipment scheduling becomes the limit.
• Ask an accountant to sign off the change of rate approach for contracts that straddle the date.

Where Design Software Fits

Quotes that fix scope early are easier to schedule and invoice around the deadline. Design software like Reslink produces the layout, bill of materials and proposal documents from one design, so a quote can go out with a fixed scope. It does not decide the VAT treatment of a job.

See the full workflow → Book a demo

Frequently Asked Questions

Q1. When does 0% VAT on solar panels end in the UK?

On 31 March 2027. From 1 April 2027 qualifying installations are charged at the reduced rate of 5%.

Q2. Did the Budget extend the 0% rate?

No. Trade reports quoting the October 28, 2026 Budget document say the rate reverts to 5% as planned. The Budget did extend the zero rate on household electricity to June 30, 2027, which is a different relief.

Q3. Will VAT go back to 20%?

No. HMRC's guidance says installations move to the 5% reduced rate. Selling materials without installing them is already taxed at 20%.

Q4. Does paying a deposit before 31 March lock in 0%?

Only for the amount paid or invoiced. A payment or VAT invoice before the work is complete creates a tax point for that amount, so the balance falls at the rate in force when its own tax point arises.

Q5. What if the work finishes by 31 March but the invoice goes out in April?

The change of rate rules let a supplier charge the old rate on work performed before the change, even when the invoice date would otherwise fall after it. Keep proof of the completion date and confirm the approach with an adviser.

Q6. Do home batteries qualify?

Yes. Standalone battery installations have been zero-rated since 1 February 2024, including batteries added to existing solar panels, until 31 March 2027.

Q7. Does the relief apply to commercial solar?

Usually not. It covers installations in qualifying residential accommodation and some charitable buildings. Other premises are standard-rated at 20%, so check the conditions in HMRC's Notice 708/6.

Final takeaway

The date that matters is 31 March 2027, and the question for each job is which tax point lands first: completion, a payment or an invoice. For UK installers, the work before March is scheduling, quote terms and evidence of completion dates.

You May Also Like

• MCS 2027 Deadline: What's Actually Changing for Solar and Battery EPCs
• Warm Homes Loan Scheme: Launch Status, Caps, MCS Rules
• UK Plug-In Solar 2026: What EPCs Should Tell Clients

Sources

• HM Revenue and Customs, VAT Notice 708/6: Energy-saving materials and heating equipment
• HM Revenue and Customs, VAT guide (VAT Notice 700), sections on time of supply and changes in rate
• House of Commons Library, VAT on solar panels and other energy-saving materials (September 21, 2026)
• legislation.gov.uk, Explanatory Memorandum to the Value Added Tax (Installation of Energy-Saving Materials) Order 2024 (SI 2024/24)
• UKEM, Budget 2026: What It Means for Your Home Energy Bills (October 2026), for the Budget outcome

This guide reflects HMRC guidance and the Autumn Budget as of October 31, 2026. VAT rules and treatment of individual contracts can change, so check HMRC and take advice before relying on a date or rate.