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Zero VAT for Home Battery Systems

Home Battery Systems

Home battery energy storage systems will now be exempt from Value Added Tax (VAT).

Zero VAT for Home Battery Energy Storage Systems

The Value Added Tax (VAT) on home battery energy storage systems (BESS) has been reduced to zero. The recent implementation of The Value Added Tax (Installation of Energy-Saving Materials) Order 2024 temporarily zero-rates BESS installations in homes and buildings exclusively used for charitable purposes.

This adjustment addresses a prior inconsistency that excluded nearly 1.2 million solar-powered homes from benefiting from the VAT reduction when retrofitting BESS to existing installations.

Additionally, the legislation extends the same VAT exemption to water-source heat pumps and smart diverters, enabling the efficient transfer of excess solar power into hot water tanks.

You Must Read: The extension of relief for energy-saving materials now continues beyond February 2024

The period of zero-rating is scheduled to conclude on March 31, 2027, applicable across the entire UK.

Chris Hewett, Chief Executive of Solar Energy UK, expressed his enthusiasm, stating, “The cut in VAT is exceedingly welcome, and we have every expectation that it will increase demand for home battery energy storage. By allowing solar power to be used after dark, it can double the savings offered by home solar power systems. There has never been a better time to upgrade than today.”


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