VAT hike puts brakes on home solar and batteries
![]() |
On Monday June 24, less than two weeks after outgoing Prime Minster Theresa May declared that the UK will achieve its new ‘Net Zero Carbon’ goal by 2050, a jubilant renewable energy industry was quickly pulled back down to earth. HMRC announced that, from October 1, 2019, VAT on home solar PV and solar-battery systems will increase sharply from 5% to 20%.
The PM’s net zero announcement positioned the UK as a world leader in the fight against climate change. This latest move, however, somewhat contradicts that commitment. It could also further destabilise the UK’s renewable energy industry, which was left wounded by the recent removal of the Feed-in Tariff.
Our net zero commitment still stands, of course, and it is still expected to herald more de-centralised renewable energy installations and accelerate the electrification of infrastructure, but the transition to a carbon-free future will be hampered by this VAT hike.
The labour component of solar and battery installations – the cheapest part – will remain taxed at 5%. The new rate will apply to material costs, which in general are the most expensive part of an installation. This will most likely have a negative effect on a key part of the energy mix needed to balance the grid and enable more ‘self-consumption’ by members of the public. Meanwhile (and worryingly for our net zero target), VAT rates for home gas and coal supplies will remain at 5%.
It is disappointing that, despite clear and definitive guidance from the Committee on Climate Change, and overwhelming consensus in the scientific community (and in the general population), the government still went ahead with this decision.
The official rationale is that, according to EU law ruled in 2015, the discounted tax rate was illegal to begin with. However, the government did not enact any changes to the VAT rate at the time, and the European Court of Justice has since published a VAT action plan (2016) without comment on solar power. It is perhaps telling that the new rates are due to come into effect the same month that the UK is to leave the EU.
ECA will continue to encourage government to make it clear how it intends to support industry in making the shift to a carbon-free future, and will continue to recommend actions that work for the benefit of both business and the environment.
[edit] About this article
This article was written by Luke Osborne, ECA Energy and Emerging Technologies Solutions Advisor. It was previously published on the website of the ECA in June 2019 and can be accessed here.
[edit] Related articles on Designing Buildings Wiki
- Battery energy storage systems with grid-connected solar photovoltaics BR 514.
- BRE National Solar Centre.
- BRE photovoltaic certification scheme.
- Code of practice for grid connected solar photovoltaic systems.
- Future of electricity in domestic buildings.
- Installation of photovoltaic panels on existing flat roofs - some lessons learned IP 8 14.
- Large scale solar thermal energy.
- Microgeneration.
- Micro-grid.
- Renewable energy sources: how they work and what they deliver: Part 4: Solar thermal hot water systems DG 532 4.
- Solar Squared.
- Solar thermal systems.
- Tau - the solar powered island.
- Wind loads on roof-mounted photovoltaic and solar thermal systems DG 489.
--ECA
Featured articles and news
Retrofit 25 – What's Stopping Us?
Exhibition Opens at The Building Centre.
Types of work to existing buildings
A simple circular economy wiki breakdown with further links.
A threat to the creativity that makes London special.
How can digital twins boost profitability within construction?
The smart construction dashboard, as-built data and site changes forming an accurate digital twin.
Unlocking surplus public defence land and more to speed up the delivery of housing.
The Planning and Infrastructure Bill
An outline of the bill with a mix of reactions on potential impacts from IHBC, CIEEM, CIC, ACE and EIC.
Farnborough College Unveils its Half-house for Sustainable Construction Training.
Spring Statement 2025 with reactions from industry
Confirming previously announced funding, and welfare changes amid adjusted growth forecast.
Scottish Government responds to Grenfell report
As fund for unsafe cladding assessments is launched.
CLC and BSR process map for HRB approvals
One of the initial outputs of their weekly BSR meetings.
Architects Academy at an insulation manufacturing facility
Programme of technical engagement for aspiring designers.
Building Safety Levy technical consultation response
Details of the planned levy now due in 2026.
Great British Energy install solar on school and NHS sites
200 schools and 200 NHS sites to get solar systems, as first project of the newly formed government initiative.
600 million for 60,000 more skilled construction workers
Announced by Treasury ahead of the Spring Statement.
The restoration of the novelist’s birthplace in Eastwood.
Life Critical Fire Safety External Wall System LCFS EWS
Breaking down what is meant by this now often used term.
PAC report on the Remediation of Dangerous Cladding
Recommendations on workforce, transparency, support, insurance, funding, fraud and mismanagement.
New towns, expanded settlements and housing delivery
Modular inquiry asks if new towns and expanded settlements are an effective means of delivering housing.