Solar Panel VAT Is Changing in April 2027: What Scottish Homeowners Need to Know

Qualifying domestic solar panel installations in Scotland are currently charged at 0% VAT, but that is due to change from 1 April 2027.

Under the current rules, the temporary 0% VAT rate ends on 31 March 2027. From 1 April 2027, qualifying solar installations are due to return to the reduced VAT rate of 5%.

That means homeowners planning to install solar panels, battery storage or other qualifying energy-saving technology could face a higher upfront cost from next April.

For example, if a qualifying solar installation costs £10,000 before VAT, a 5% VAT charge would add £500 to the price.

So, what exactly is changing? Does the new VAT rate apply to batteries too? And is it worth installing solar before April 2027?

Here is what homeowners in Scotland need to know.

Is VAT currently charged on domestic solar panels in Scotland?

Qualifying professionally installed domestic solar panel systems are currently charged at 0% VAT in Scotland.

The temporary zero rate was introduced as part of the UK Government's VAT relief for certain energy-saving materials.

Solar panels are specifically included within the relief.

Where the relevant conditions are met, the 0% rate can apply to both:

• the qualifying solar equipment supplied by the installer; and
• the installation work associated with the system.

This means that eligible homeowners currently pay no VAT on a qualifying professionally installed solar PV system.

When does 0% VAT on solar panels end?

The current 0% VAT rate is scheduled to end on 31 March 2027.

From 1 April 2027, qualifying installations of energy-saving materials, including solar panels, are due to move to the reduced VAT rate of 5%.

This is already built into the current VAT rules.

Unless the government changes or extends the relief before then, homeowners installing solar after the change will therefore need to factor the 5% VAT rate into the cost of their system.

How much more could solar panels cost after April 2027?

The exact increase will depend on the cost of your installation.

Installation cost before VAT	VAT at 0%	VAT at 5%	Additional cost
£6,000	£0	£300	£300
£8,000	£0	£400	£400
£10,000	£0	£500	£500
£12,000	£0	£600	£600
£15,000	£0	£750	£750

These are simple examples based on the full qualifying installation being subject to the 5% reduced rate.

The VAT treatment of an individual project will depend on the rules applying to that specific installation.

Will solar battery VAT also increase to 5%?

Yes. Qualifying electrical battery storage installations are also due to move from 0% VAT to 5% from 1 April 2027.

Electrical battery storage was added to the temporary VAT relief from 1 February 2024.

The relief can apply to qualifying:

• batteries installed alongside solar panels;
• batteries added to an existing qualifying solar installation; and
• certain standalone electrical battery storage installations.

As with solar panels, the current 0% VAT treatment is scheduled to end on 31 March 2027.

Does the VAT change apply to solar panels in Scotland?

Yes.

The current relief applies to qualifying installations in residential accommodation across Great Britain, including Scotland.

Scottish homeowners are therefore covered by the same scheduled move from 0% VAT to 5% VAT from 1 April 2027.

Does the VAT change apply to existing solar panel systems?

No.

The change does not retrospectively add VAT to a solar installation you have already paid for and had installed.

It affects the VAT treatment of qualifying supplies made from the date the new rate applies.

If you already have solar panels installed, your existing system is not suddenly subject to an additional VAT charge.

If I book solar before April 2027, will I definitely get 0% VAT?

Not necessarily.

This is one of the most important points to understand.

VAT is based on rules known as tax point rules.

For services, the basic tax point is normally when the work is completed. However, if a VAT invoice is issued or payment is received before the work is completed, this can create an earlier tax point for the amount invoiced or paid.

This means that simply:

• accepting a quotation;
• signing a contract; or
• booking an installation date

before 1 April 2027 does not necessarily guarantee that the entire project will qualify for the 0% VAT rate.

The timing of payments, invoices and installation work can all matter.

If you want your installation completed under the current VAT rules, it is therefore sensible to start the process well before the deadline.

Why should homeowners avoid leaving it until March 2027?

A solar installation involves much more than simply turning up and fitting panels to a roof.

Depending on the property and system, the process can include:

• an initial consultation;
• a property or roof survey;
• system design;
• quotation and approval;
• network applications where required;
• equipment ordering;
• installation scheduling;
• the installation itself; and
• invoicing and payment.

If large numbers of homeowners decide to install solar shortly before the VAT deadline, installer availability could also become more limited.

Planning early gives you more time to choose the right system without rushing simply to meet a tax deadline.

Should I install solar panels before April 2027?

If solar is already something you are seriously considering, the scheduled VAT increase gives you an additional reason to look at your options sooner rather than later.

A move from 0% VAT to 5% does not completely change the economics of solar, but it does increase the upfront cost.

On a £10,000 qualifying installation, the difference is £500.

On a £15,000 installation, it is £750.

That could otherwise contribute towards:

• battery storage;
• an EV charger;
• a larger solar system;
• electrical upgrades; or
• simply reducing the amount you need to spend upfront.

The decision to install solar should still be based on whether the system is right for your home, electricity usage and budget.

But if you already intend to install solar, there is little benefit in unnecessarily delaying the project until after the VAT rate rises.

Will solar panels still be worth it after VAT rises to 5%?

For many suitable homes, yes.

The VAT increase affects the upfront installation cost, but it does not change the fundamental benefits of generating your own electricity.

Solar panels can still help you:

• reduce the amount of electricity you buy from the grid;
• reduce your exposure to future electricity price increases;
• generate electricity for decades;
• earn payments for eligible surplus electricity exported to the grid;
• make better use of battery storage;
• help charge an electric vehicle; and
• reduce household carbon emissions.

The additional 5% cost may slightly extend the time it takes for a system to pay for itself, but it does not automatically make solar a poor investment.

To see what solar and battery storage has delivered for other homeowners, take a look at our solar installation case studies.

Will the government extend 0% VAT beyond March 2027?

At the time of writing, no extension has been confirmed.

The rules currently state that qualifying energy-saving material installations will return to the reduced VAT rate of 5% from 1 April 2027.

The government could choose to change or extend the relief before then, but homeowners should not assume that will happen.

For planning purposes, the current position is:

0% VAT until 31 March 2027, followed by 5% VAT from 1 April 2027.

Does 0% VAT apply if I buy solar panels myself?

Generally, no.

The VAT relief applies to qualifying energy-saving materials supplied as part of a qualifying installation.

If you buy solar panels or equipment separately for DIY installation, the same relief will not normally apply.

The installer generally needs to supply and install the qualifying equipment for the energy-saving materials relief to apply.

Does the solar VAT relief apply to businesses?

The temporary 0% energy-saving materials relief is primarily aimed at qualifying installations in residential accommodation and certain buildings used solely for relevant charitable purposes.

Ordinary commercial solar installations do not generally fall under the same domestic VAT relief.

Businesses should assess the VAT position of a commercial solar project separately, including whether the business is VAT registered and able to recover VAT.

What other energy-saving technologies are affected?

The temporary VAT relief applies to a range of qualifying energy-saving materials.

Alongside solar panels and electrical battery storage, this can include qualifying:

• air source heat pumps;
• ground source heat pumps;
• water source heat pumps;
• insulation;
• central heating and hot water controls;
• smart diverters;
• wind turbines; and
• water turbines.

Under the current rules, qualifying installations covered by the temporary zero rate are due to return to the reduced 5% VAT rate from April 2027.

Why was VAT reduced to 0% on solar panels?

The temporary 0% rate was introduced to make energy-saving improvements more affordable for households and encourage investment in technologies that reduce energy consumption and carbon emissions.

Before the temporary zero rate was introduced, qualifying solar panel installations could already benefit from a reduced VAT rate of 5%.

The current 0% rate is therefore temporary.

Unless the rules change again, qualifying installations will return to that 5% reduced rate from April 2027.

What should Scottish homeowners do before the VAT change?

If solar panels are already on your radar, the main thing is not to leave the process until the last minute.

A good solar system should be designed around your home rather than around a tax deadline.

At Eco Vision Energy, we look at factors including:

• your roof size and orientation;
• shading;
• your current electricity consumption;
• when you use electricity;
• whether battery storage would be suitable;
• whether you have or plan to install an EV charger;
• whether you may add a heat pump in future; and
• the most suitable system size for your property.

Starting early gives you time to properly assess the system and gives your installer more opportunity to complete the project before the VAT rules change.

If you are considering solar panels or battery storage in Scotland before the VAT rate is due to increase, speak to Eco Vision Energy for a free quote and system assessment.

Frequently Asked Questions About Solar Panel VAT in 2027

Is there currently VAT on solar panels in Scotland?

Qualifying professionally installed domestic solar panel systems in Scotland are currently charged at 0% VAT under the temporary energy-saving materials relief.

When does 0% VAT on solar panels end?

The current temporary 0% VAT rate is scheduled to end on 31 March 2027.

What will VAT on solar panels be from April 2027?

Qualifying solar panel installations are currently due to move to the reduced VAT rate of 5% from 1 April 2027.

How much will 5% VAT add to the cost of solar?

It depends on the cost of the system. On a qualifying £10,000 installation, 5% VAT would add £500. On a £15,000 installation, it would add £750.

Will solar battery VAT increase in April 2027?

Yes. Qualifying electrical battery storage installations that currently benefit from 0% VAT are also scheduled to move to the reduced 5% rate from 1 April 2027.

Can standalone battery storage qualify for 0% VAT?

Yes. Since February 2024, qualifying standalone electrical battery storage installations in residential accommodation can fall within the energy-saving materials VAT relief, subject to the relevant conditions.

If I book solar before April 2027, will it definitely be VAT free?

No. Booking an installation or signing a quotation does not automatically guarantee that the full project will be charged at 0% VAT. VAT tax point rules mean the timing of payment, invoicing and completion can affect which VAT rate applies.

Will the solar VAT deadline be extended?

No extension has currently been confirmed. The existing rules provide for the 0% VAT rate to end on 31 March 2027 and the reduced 5% rate to apply from 1 April 2027.

Does 0% VAT apply to DIY solar panels?

Generally, no. The relief applies to qualifying energy-saving materials supplied as part of an eligible installation. Equipment purchased separately for DIY installation does not normally qualify for the same VAT relief.

Does 0% VAT apply to commercial solar?

Ordinary commercial solar installations do not generally fall within the same domestic 0% energy-saving materials relief. Commercial installations have separate VAT considerations.

Will solar panels still be worth it after VAT increases to 5%?

For many suitable properties, yes. The VAT increase raises the upfront cost slightly, but solar can still reduce grid electricity consumption, provide long-term energy savings and generate electricity for decades.