Last updated: October 2026
Until 31 March 2027, there is 0% VAT on heat pumps, solar panels, batteries and many other energy-saving installations in homes, instead of the usual 5%. On a large project like a heat pump, solar panels and battery, that’s a significant saving, and it applies on top of the Boiler Upgrade Scheme grant.
What’s covered?
The 0% rate applies to the installation of energy-saving materials in homes, including:
- heat pumps, air source, ground source and water source
- solar panels
- battery storage, including batteries added to an existing solar system (since February 2024)
- insulation for walls, floors, lofts and roofs
- draught stripping
- heating controls and central heating system controls
- wood-fuelled boilers and small wind and water turbines
What counts towards the 0% rate?
The relief covers both the materials and the installation, as long as they’re supplied and fitted together by a VAT-registered installer as one job. With a heat pump, the work needed to install it, such as new radiators and pipework, can usually be included. For ground source heat pumps, qualifying groundworks for the ground loops are covered too.
Buying equipment yourself and fitting it later doesn’t qualify. Your installer can tell you exactly what’s included in your quote.
What happens after March 2027?
The 0% rate was introduced in 2022 as a temporary five-year relief. Unless the government extends it, the rate is due to go back to 5% from 1 April 2027. The £9,000 grant for oil and LPG homes also ends on 31 March 2027, so early 2027 is likely to be a busy time for installers.
How much does 0% VAT save?
Before the relief, these installations were charged at the reduced VAT rate of 5%. On a £10,000 solar and battery installation, for example, 5% VAT would add £500. On a larger heat pump project, the saving is bigger. Your quote should show the VAT line clearly, so you can see the saving.
What changed in 2024?
From 1 February 2024, the government widened the relief to include batteries (including standalone batteries and those added to an existing system), water source heat pumps, diverters that let you use surplus solar electricity in your home, and the groundworks needed for ground and water source heat pumps. These changes are set out in the government’s explanatory memorandum.
Frequently asked questions
Do I need to apply for 0% VAT?
No. Your installer charges VAT at 0% on qualifying work, as long as they supply and fit the materials as one job. Check that your quote shows how VAT has been applied, and ask your installer if anything is unclear.
Can I get 0% VAT on heat pumps and the Boiler Upgrade Scheme grant?
Yes. The grant and the 0% VAT rate apply together, so you benefit from both on a heat pump installation. See our guide to how much a heat pump costs for typical prices.
Does 0% VAT apply to businesses?
No. 0% VAT on heat pumps and other energy-saving materials is for residential homes and for buildings used by charities for non-business purposes, such as village halls. Commercial installations are charged at the standard rate.
What if my installation runs past 31 March 2027?
VAT depends on when the work is supplied, so if your installation might finish close to the deadline, talk to your installer early. Booking your survey well ahead gives you the best chance of completing in time.
If you’re thinking about a heat pump, solar or a battery, it’s worth getting a survey booked well before the deadline. Contact us or call 01242 323923.