Zero-VAT on energy saving materials in the UK is a major incentive for homeowners considering solar panels and battery storage. With the government introducing a zero-rate VAT policy on qualifying materials like solar PV systems and certain battery installations, many people want to know: who qualifies, what’s covered, how long the relief lasts, and how the Energy Company Obligation 4 (ECO4) and the Smart Export Guarantee (SEG) interact with it.
What is the Zero-VAT Policy for Energy Saving Materials in the UK?
The UK government introduced the zero-rate VAT policy on 1 April 2022, as part of a wider push to make energy-saving technologies more affordable for households. This policy replaced the previous 5% reduced rate of VAT that applied to certain qualifying installations.
The zero-rate applies specifically to the installation of energy-saving materials (ESMs) in residential accommodation. These include solar panels, battery storage systems, and energy diverters (devices that divert surplus electricity to batteries or heating systems).
The policy is time-limited: the 0% VAT relief is currently set to run until 31 March 2027, after which VAT is expected to revert to the reduced rate. During this five-year period, homeowners can save hundreds of pounds on the upfront cost of installing solar and battery systems.
Official guidance on the scheme can be found in HMRC’s VAT Notice 708/6, which details the eligible materials and conditions for the relief.
ECO4 and LA Flex – Who Qualifies & How They Work
ECO4, Ofgem administer ECO4 on behalf of DESNZ and could help households with EPC Ratings D-G or those on low income or certain welfare benefits. ECO4 Flex offers a Flexible Eligibility route, allowing local authorities to refer households that do not meet the standard eligibility criteria.
Smart Export Guarantee (SEG)
The Smart Export Guarantee (SEG) is a government-backed scheme that launched on 1 January 2020, replacing the old Feed-in Tariff (FiT) programme which closed in 2019. It gives homeowners with solar panels, and other small-scale renewable systems, a simple way to earn money for the electricity they send back to the grid.
If you have battery storage, the benefits are even greater. Instead of exporting excess electricity straight away, you can store it for when you need it most – and still export any surplus later to receive SEG payments, although not all providers offer this option, so be mindful when choosing.
You can read the full guidance on the official GOV.UK SEG page here.
You can find out more about funding options in our funding page here.
Don’t Miss Out Before 2027
Zero-VAT on energy saving materials is a valuable incentive for solar PV and battery installations. When combined with ECO4 / LA Flex and the Smart Export Guarantee, homeowners can significantly reduce upfront costs and boost returns. The key is to act before March 2027. To check your eligibility, speak to the team at Smart Living Energy who will be happy to help you.
Finance Options – Making Solar & Battery Affordable
Alongside incentives such as 0% VAT, ECO4, and the Smart Export Guarantee, we also offer a range of flexible finance options to help spread the cost of your solar and battery installation. This means you can start saving on your energy bills immediately, while paying in manageable monthly instalments.
Please contact us to find out more about 0% VAT installations, check your eligibility and explore the finance options that can be tailored to your home and budget.
Email – info@smartliving.energy
Telephone – 0800 008 6209