Home battery systems VAT slashed to zero

VAT will no longer be applied to domestic battery energy storage systems

Value Added Tax (VAT) on domestic battery energy storage systems (BESS) is reduced to zero.

The Value Added Tax (Installation of Energy-Saving Materials) Order 2024 introduces a temporary zero rating for BESS installations in homes and buildings used solely for charitable purposes.

This is addressing a previous discrepancy that left nearly 1.2 million solar-powered homes excluded from the VAT cut if BESS was retrofitted to existing installations.

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

The zero-rating period is set to conclude on 31st March 2027, across the UK.

Chris Hewett, Chief Executive of Solar Energy UK, said: “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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