Householders could receive a significant price cut when installing “qualifying” solar panels with battery storage technologies.

HM Revenue & Customs (HMRC) told ELN a single indivisible supply and installation of solar panels with a battery in residential accommodation would be charged a 5% VAT rate – “on the understanding the battery is linked to the solar panels and ancillary to the supply of the solar panels”.

That means if batteries are sold separately and retrofitted to existing solar systems, the standard rate of 20% would apply.

The HMRC stressed that “each individual case would have to be considered on its own facts”.

The news follows the Solar Trade Association’s (STA) evidence submission arguing storage systems should qualify for the 5% rate levied on energy-saving technologies.

It welcomed the move but stated: “The STA strongly believes that all storage should be given the reduced rate and will continue to engage with HMRC.

“The policy wins are needed as solar deployment has fallen to a seven-year low. The industry is struggling with a policy framework that now provides tax breaks for fossil fuels that are not applied to solar.”

The news comes as the government recently launched the first phase of a £246 million battery storage challange and set out plans with Ofgem to encourage consumers to generate, store and use their own energy

IKEA recently inked a deal with Solarcentury to offer solar and storage technologies to customers.