If you are having insulation, solar panels, a heat pump or a home battery fitted, there is a decent chance you pay no VAT on the job at all. Since April 2022 a long list of energy-saving measures has carried a VAT rate of 0 per cent in Great Britain, down from the 5 per cent that applied before, and well below the 20 per cent you would normally pay on goods. On a big install that relief is worth a four-figure sum. There is one condition that trips people up, and a deadline worth knowing about, so it pays to understand how it works before you accept a quote.
The short answer. Energy-saving materials fitted in your home carry 0% VAT until 31 March 2027, when the rate is due to rise back to 5 per cent. The catch is that the relief covers the whole job only when the same contractor supplies and installs the materials together. Buy the materials yourself to fit, and you pay the normal 20 per cent on them. The relief is separate from grants, so you can often claim both.
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What the 0% rate actually is
VAT is the tax added to most things you buy, usually at 20 per cent. Certain goods and services get a lower rate, and the installation of energy-saving materials is one of them. From 1 April 2022 the government cut that rate from 5 per cent to zero across Great Britain, meaning a qualifying installation has no VAT added to it at all. Northern Ireland came into line a little later, from the middle of 2023. This is not a grant you apply for and it is not a rebate you claim back. The installer simply does not charge VAT on a qualifying job, so the saving is already baked into the price they quote. The sum matters most on the larger measures, because the bigger the bill, the bigger the slice that VAT would otherwise have taken.
What qualifies
The list is broad and covers most of the measures people fit to cut their bills. It includes:
- Insulation of all the usual kinds: loft, cavity wall, solid wall, floor and roof. The loft insulation and cavity wall insulation guides cover those jobs.
- Draught stripping around doors and windows.
- Central heating and hot water system controls, such as thermostats and timers.
- Solar panels, covered in is solar worth it, along with solar water heating.
- Air-source, ground-source and water-source heat pumps, explained in heat pumps explained.
- Wind turbines and water turbines for a home.
- Wood-fuelled boilers and micro combined heat and power units.
- Battery storage, including a standalone battery retrofitted on its own, which was added to the list from early 2024 along with a few related items such as diverters and the groundworks tied to a heat pump install.
The relief applies to residential homes and to buildings used only for a charitable purpose. It does not matter whether you own or rent, though in a rented home it is normally the landlord arranging the work.
The condition that catches people out
Here is the part that surprises people. The 0 per cent rate is a relief on the installation of energy-saving materials, and it covers the materials themselves only when the same supplier both provides and fits them as a single job. In other words, it is a supply-and-install relief. If a contractor quotes you for a solar array fitted on your roof, the panels, the inverter and the labour all come at 0 per cent. But if you walk into a builders' merchant, buy rolls of loft insulation and fit them yourself over the weekend, those rolls are standard goods and carry the full 20 per cent VAT, because there is no installation in the sale. The same goes for a battery or a set of panels you buy online to wire in yourself.
This is worth planning around. For a measure you could realistically fit yourself, such as basic loft insulation, you are weighing the 20 per cent VAT on the materials against the labour cost of paying someone to fit them and get the relief. For anything that needs a professional anyway, such as solar or a heat pump, there is no decision to make: use an installer and the whole job is zero-rated. If a quote does show VAT on a measure you believe qualifies, ask the installer why, because it may be a mistake or the work may fall outside the relief.
What you actually save
The saving is the VAT you are not paying. Compared with the 20 per cent that would apply to ordinary goods, the relief is substantial on a large job. The table shows illustrative installed prices and what the 0 per cent rate saves against both the old 5 per cent rate and the standard 20 per cent.
| Example job (price paid) | Saved vs 5% | Saved vs 20% |
|---|---|---|
| Loft and cavity insulation, £1,500 | ~£75 | ~£300 |
| Solar and battery, £7,000 | ~£350 | ~£1,400 |
| Air-source heat pump, £13,000 | ~£650 | ~£2,600 |
Illustrative installed prices. The figures show the VAT you avoid under the 0 per cent rate compared with the 5 per cent reduced rate and the 20 per cent standard rate. Actual prices vary widely by home and installer.
A worked example makes the DIY trap concrete. Say you buy £400 of loft insulation at a merchant to fit yourself. Roughly £67 of that £400 is VAT at 20 per cent, and you cannot avoid it, because you are buying goods rather than an installed measure. Had an installer supplied and fitted the same insulation as part of a job, that VAT would have been zero. Whether paying for installation is worth it depends on how much the labour adds and whether you are happy up a ladder in the loft.
The March 2027 deadline
The 0 per cent rate was introduced as a time-limited measure. As things stand it runs until 31 March 2027, after which the rate is set to return to the 5 per cent reduced rate rather than jumping straight to 20 per cent. So the worst case after the deadline is still a reduced rate, not the full whack. That said, 5 per cent on a £13,000 heat pump is £650 you would rather keep, so if you are already planning a large install there is a modest saving in having it done while the zero rate holds. It is sensible to treat the deadline as a soft nudge rather than a reason to rush a decision you are not ready for. Policy can change, and a date two or three years out can move, so check the current position before you bank on it.
How it sits alongside grants
The VAT relief is not a grant, and that distinction matters because it means you can usually have both. If you get a heat pump grant through the Boiler Upgrade Scheme, the grant reduces the price, and the 0 per cent VAT applies to what is left to pay. The same stacking works with insulation help through the Great British Insulation Scheme. In practice the installer handles all of this on the quote: the grant comes off, and no VAT is added. For the full picture on what support is out there for the big measures, heat pump grants and cost and solar panel grants go through the schemes.
Northern Ireland and the things it does not cover
Northern Ireland sat on the 5 per cent reduced rate when Great Britain moved to zero in 2022, then caught up to the 0 per cent rate from the middle of 2023, so the position across the UK is now broadly the same. A few things fall outside the relief worth flagging. It does not extend to a brand-new build, because new homes are already zero-rated for VAT in their own right under separate rules. Pure repairs that are not installing a qualifying measure do not count. And where a job mixes qualifying work with unrelated building work, the VAT may need splitting between the two, which again is for the installer to sort out on the invoice.
The bottom line
Energy-saving materials fitted by a contractor carry no VAT at all until the end of March 2027, which knocks a serious amount off a solar, battery or heat pump install and a useful bit off insulation. The one thing to remember is that the relief rewards having the work done rather than buying the kit yourself, so DIY materials still carry the standard 20 per cent. Check that a quote for qualifying work shows no VAT, remember the relief stacks on top of any grant, and if you are planning a large install there is a small extra reason to get it booked while the zero rate is in place. For the decision on whether the measures are worth it in the first place, is solar worth it and heat pumps explained are the places to start.
Common questions
Is there VAT on solar panels in the UK?
No, not when they are supplied and installed together by the same contractor in a home in the UK. Solar panels are on the list of energy-saving materials that carry 0 per cent VAT until 31 March 2027. If you buy panels on their own to fit yourself, they carry the standard 20 per cent.
Do heat pumps have VAT on them?
A heat pump installed in your home is zero-rated for VAT until the end of March 2027, covering the unit and the installation as one job. Air-source, ground-source and water-source heat pumps all qualify. The relief applies on top of any grant, so you pay no VAT on the price that remains after a grant comes off.
Can I get 0% VAT if I fit insulation myself?
No. The relief covers the installation of energy-saving materials by a supplier who both provides and fits them. Materials you buy on their own to install yourself are standard goods and carry 20 per cent VAT. To get the zero rate on insulation you would need a contractor to supply and fit it.
When does the 0% VAT rate end?
It is currently due to run until 31 March 2027, after which the rate is set to return to the 5 per cent reduced rate rather than the full 20 per cent. Policy and dates can change, so it is worth checking the current position before relying on it for a large job.