UK Government announces 0% VAT on Battery Storage Systems
In a pivotal announcement made in December 2023, the UK government has unveiled significant reforms to the current VAT relief on the installation of qualifying energy-saving measures. And let’s just say it’s time for us energy fans to rejoice! Building on Chancellor Rishi Sunak’s announcement during the 2022 Spring Statement, which saw homeowners gained tax relief on energy-efficient system installations including solar panels, the UK government is set to broaden the scope. Introducing 0% VAT and support for several emerging technologies including solar batteries. This strategic decision represents a crucial step towards creating a sustainable, fossil fuel-free UK.
What new Technologies are now VAT free?
The government will be expanding their TAX relief to the following technologies:
- Battery Storage Systems
- Water-source Heat Pumps
- Immersion Diverters retrofitted to energy-saving measures such as solar panels and wind turbines.
As well as introducing these new technologies, the government will also be extending the TAX relief to premises used for charitable purposes.
When will the VAT exemption on Battery storage start?
The new policy is set to be implemented as of 1st February 2024.
How long will VAT on Battery Storage be 0% for?
The tax relief on these technologies is set to last until 31st March 2027 across the entire United Kingdom. After which the tax will return to a reduced VAT of 5%, rather than the previous 20%.
What type of Battery storage installations are VAT free?
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Solar Panels with Battery Storage Installations
For homeowners looking to install both solar panels with battery storage simultaneously, the VAT on this type of installation will remain at 0%. A full Solar PV System installation is the best type of solar installation for optimising your energy consumption, and increasing your overall energy independence.
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Standalone Battery Storage Systems
If you are looking to install a home battery storage without solar panels, or another renewable energy supply, you will also benefit from 0% VAT off of your installation! Standalone battery storage systems can be a great way to take advantages of time-of-use tariffs and plunge energy prices, whilst also providing energy security in the event of grid failure. By simply charging your battery cheaply overnight, when energy price are at their lowest and greenest, you can reduce your strain on the grid whilst also saving money on your energy bill. This stored energy can then be discharged during the day, during peak hours when your property demands power the most.
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Retrofit Battery Installations
If you already have a solar panel system and are looking to benefit from retrofitting a solar battery, you too will receive a VAT exemption on your installation. There are many benefits to adding battery storage to your solar panels. By adding battery storage you can store any excess generated energy to use during periods where your generation is slow, for example on cloudy days or during the evening. This reduces your reliance on the grid and enhances your energy independence whilst further reducing your carbon footprint. You can save up to 90% off your energy bill by maximising your self-consumption through a battery storage and solar panel installation, so it is worth considering. The 0% on retrofitting batteries also applies to other technologies such as wind and water turbines.
Tax Relief on Battery Storage: Why is it so important?
At Deege Solar we are committed to helping the UK transition towards a brighter, cleaner, and greener future, so of course welcomed the news with open arms. Here’s what our Managing Director had to say:
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It's fantastic for not only the public but the sector as a whole, that the UK government has extended tax relief to battery storage systems too. This has been a long time coming and is great news to that should continue to drive and simulate the renewable energy sector here in the UK. By reducing the costs and increasing government incentives it makes these technologies easier for homeowners to access, adopt and fall in love with. Not only does it encourage the adoption of energy-saving technologies, but it also helps remove the strain on the current grid infrastructure and pushes us one step closer to Net Zero. It's great to know that the government have listened and has taken on board the industry's comments and feedback. Like I've always said, working together is key to solar powering the UK.
David Norman
Is It the Right Time to Invest in battery storage?
With there being 0% VAT on solar panels and battery storage there is no time like the present to invest in solar energy, and or expand your existing system. It is great to see the government finally recognise the integral role that both battery storage and immersion diverters such as the myenergi eddi, play in reducing homeowners’ reliance on the grid. Both technologies are key in enabling homeowners to retain as much green energy within the home to optimise their green energy use. It’s great to see the government get behind homegrown energy!
If you are a UK homeowner looking to take advantage of the No VAT Announcement on batteries, immersion diverters and solar panels, get in touch with our green team today for a free quote. Call us today on 01322 479369 or click the enquire now button to talk to a solar expert.
