UK Government Scraps VAT on Battery Storage

Following a recent consultation, the UK government has expanded the list of energy-saving materials (ESMs) that qualify for VAT relief. From February, residential installations of retrofitted and standalone battery energy storage systems will now be exempt from VAT.

Previously, the 0% rate of VAT on battery storage only applied when installed alongside other ESMs (e.g. solar panels). However, according to the summary of responses, the government now “recognises the integral role that electrical battery storage can play in reducing households’ reliance on the grid”.

As a result, all home battery system installations will now be free from VAT. This includes when retrofitted to a qualifying ESM or installed as a standalone grid-connected technology.


0% VAT on battery storage


What Does 0% VAT on Battery Installations Mean for Homeowners?

This recent change is great news for those looking to save money and increase their energy independence. With the cost of living crisis ongoing and no energy bill discount in place this winter, now is the perfect time to invest in battery storage.

By removing VAT, the upfront cost of investing in a home battery system will effectively be reduced by 20%. This could lead to thousands of pounds in savings, significantly accelerating your return on investment.

Tom Taylor, Director at Contact Solar, commented: “We are delighted to hear about the upcoming 0% VAT rate on retrofitted and standalone battery systems. This decision signals the government’s clear support for homeowners embracing renewable energy and storage solutions.

“As we will no longer need to charge VAT on battery retrofit installations, we can pass these savings on directly to our customers. We hope that this will help make energy-saving technologies more accessible and economically viable for households across the UK.”


When Does the VAT Exemption for Battery Storage Systems Come Into Effect?

The upcoming 0% VAT on battery storage installations will come into effect on 1st February 2024. The exemption will apply to homes across the entire UK.

Other ESMs have also been added to the VAT exemption list, including water-source heat pumps and retrofitted immersion diverters. In addition, tax relief will be extended to buildings used for charitable purposes as well as residences.

The 0% VAT rate on qualifying ESMs, including the recently added technologies, is set to last until 31st March 2027. After this date, VAT will rise to 5% rather than returning to the previous rate of 20%. However, there is a chance that the government may choose to extend the exemption before it expires.


Take advantage of 0% VAT on retrofit solar batteries with Contact Solar. Get a free quote now!


0% VAT on battery storage


What Are the Benefits of Home Battery Storage?

A home battery energy storage system allows you to store electricity for future use. This offers several financial benefits for homeowners, such as:

  • Time-of-use optimisation. If you are on a multi-rate tariff, such as Economy 7, you can charge your batteries during cheaper off-peak hours. During the day, you can then power your home using stored electricity rather than paying the higher rate.
  • Increased self-consumption. Combined with domestic solar panels, batteries can be used to store excess self-generated energy rather than exporting to the grid. You can then power your home from your batteries at night, or on days when solar production is lower, such as in winter.
  • EV integration. Many modern home EV chargers can integrate with battery storage systems. This means you can use stored solar and grid energy to charge your vehicle as well as power your home.

Besides saving you money, coupling batteries with renewable energy sources (like solar panels) can substantially reduce your fossil fuel use. This is a great way to cut your carbon footprint and work towards the UK’s efforts to combat climate change.

Batteries can be used as a standalone technology, installed as part of a solar PV system or retrofitted to existing solar panels. Thanks to the upcoming tax reforms, all three types of battery installations will be exempt from VAT from February 2024.


Get Your Free Contact Solar Battery Installation Quote Today

We are Contact Solar: trusted UK solar panel and battery storage specialists. Whether you’re looking to retrofit battery storage to your solar panels or invest in a brand-new solar PV system, we can help. Our highly trained advisors will be happy to recommend the ideal setup for your property, budget and energy needs.

As a Which? Trusted Trader, we are proud to offer unbeatable quality, service and value on solar PV and battery installations. We only install the latest, most efficient components with extended warranties from leading global manufacturers. Our priority is to help every customer achieve the highest possible returns on their investment.

Ready to start saving money with VAT-free home battery storage? Call Contact Solar on 0800 201 4527, email [email protected] or fill in our enquiry form today for a free, no-obligation quote!


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