The UK government has introduced a major incentive to help households cut their energy bills and move toward greener living. Since April 2022, a wide range of renewable energy installations have qualified for 0% VAT, making it cheaper than ever to upgrade your home with modern, energy-saving technology.

This zero VAT rate will run until 31 March 2027, giving homeowners a five-year window to make the switch to cleaner and more efficient systems.

Why Has VAT Been Reduced to 0%?

With rising energy bills and global instability affecting fuel prices, the government announced in the Spring Statement that VAT on certain energy-efficient measures would drop from 5% to 0%.

This applies to professional installations of technologies like solar panels, heat pumps, and insulation. According to the government, a typical family installing solar panels could save more than £1,000 in VAT alone and reduce yearly energy bills by over £300.

The scheme now covers even more technologies, including water-source heat pumps, and applies to homes as well as buildings used solely for charitable purposes.

Which Renewable Systems Qualify for 0% VAT?

0% VAT on Solar Panels and Battery Storage

Solar panels remain one of the most popular renewable upgrades. They reduce your reliance on the grid and help cut energy costs.

From February 2024, battery storage also qualifies for 0% VAT, including standalone or retrofit installations.

0% VAT on Air Source and Ground Source Heat Pumps

Heat pumps offer efficient, low-carbon heating for homes. Both air source and ground source systems qualify for the reduced VAT rate. They can also work hand-in-hand with solar to create a complete renewable energy setup.

0% VAT on Other Energy Saving Measures

You can also benefit from 0% VAT when installing:

• Biomass heating
• Underfloor heating (when installed alongside renewable systems)
• New radiators (when installed alongside renewable systems)
• Insulation upgrades
• Controls and additional heating improvements that support a renewable system

If you upgrade your radiators or add underfloor heating while installing a heat pump or solar system, the whole installation can qualify for 0% VAT.

How the Zero VAT Rate Helps You Save

Lower Installation Costs

Removing VAT instantly reduces the upfront cost of renewable energy systems. This can save homeowners thousands of pounds depending on the project size.

Faster Return on Investment

Solar panels, heat pumps, and battery systems help reduce energy bills from day one. With zero VAT, the break-even point arrives sooner.

Increases Property Value

Homes with renewable energy systems are becoming more attractive to buyers. Lower running costs, better EPC ratings, and long-term efficiency all add value.

Environmental Benefits

Whether you live in Buckinghamshire, Berkshire, Surrey, London, or anywhere in the UK, choosing renewable energy helps create cleaner, greener communities and supports national carbon reduction goals.

Residential vs Business VAT Rules

For homes, the VAT rate on renewable installations is 0%, as long as the work is completed by a professional installer. DIY installations do not qualify.

For businesses, the standard VAT rate of 20% still applies, although businesses may be able to reclaim this cost depending on their tax status and energy usage.

How to Qualify for the 0% VAT Scheme

1. Use a Certified Installer

Only installations carried out by a professional qualify for 0% VAT. Always choose an accredited and experienced installer who understands the rules.

2. Combine Renewable Upgrades for Bigger Savings

Installing a heat pump? Add new radiators or underfloor heating at the same time and qualify for 0% VAT on the full installation.

You can also claim the £7,500 Boiler Upgrade Scheme grant to reduce heat pump costs further.

3. Check the Eligibility Criteria

Before starting any project, confirm that your chosen system qualifies. If in doubt, speak to an expert who can guide you through the requirements.

When Does the 0% VAT Scheme End?

The scheme runs until 31 March 2027, after which the VAT rate is set to return to 5%. There is always a chance the government could make changes, so acting sooner ensures you get the maximum benefit.

Extra Savings: Grants and Export Payments

£7,500 Heat Pump Grant

Available through the Boiler Upgrade Scheme, this grant significantly reduces the cost of installing an air source heat pump.

Smart Export Guarantee (SEG)

If you install solar panels, you can earn payments for any surplus energy you export back to the grid. Most homeowners benefit more by using their solar energy directly, but SEG provides additional long-term value.

Is Now the Right Time to Invest in Renewables?

With rising energy prices, costly gas heating, and generous incentives like 0% VAT and heat pump grants, this is one of the best times to upgrade to renewable energy.

You can protect your home from future price rises, reduce your carbon footprint, and enjoy cleaner, more efficient heating and electricity.

If you need advice on solar panels, heat pumps, or eligibility for the zero VAT scheme, our expert team can help you choose the right system for your home.