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Find out about VAT relief on the installation of energy saving materials

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Many home owners are seeking ways to generate and use green energy. Not only is it cheaper to run your home using green energy sources, but home owners are also being incentivised to install systems to help generate green energy by applying  zero-rate VAT on certain items.  

From 1st February 2024 until 31st March 2027, the government have applied a temporary zero rate of VAT when energy-saving materials are installed. This is in addition to the existing list of materials which was announced in May 2023. The rate is usually 5% and the rate will revert back to this in 2027.

New items now included are:


Electric battery storage – including the installation of batteries which are retrofitted to store power generated by energy saving materials (for example solar panels and wind turbines) and are installed as a standalone technology connected to the national grid. Retrofitting battery storage will allow households to store energy generated by their own solar panels for later use, avoiding the need to draw electricity from the national grid at peak times. If you install a stand alone battery you will then be able to use the storage to choose between tariffs, allowing the purchase of electricity when the price is lower and use your stored energy at times of peak demand, when prices are higher.


Water source heat pumps – these transfer energy from natural heat stored in a body of water and can also be used to augment existing heating systems, like solar panels. Whilst ground source heat pumps and air source heat pumps were previously covered, the zero rate VAT will also now apply to water source heat pumps including dredging of a body of water in order to install pipework, or other equipment necessary.


Smart diverters – divert surplus power from solar panels or wind generators to a heating appliance such as an immersion heater in your home and enable the retention of energy rather than this being exported back to the National Grid. By comparison, solar batteries are more much expensive, however they are more powerful than smart diverters and should be able to store much more energy than a smart diverter will use to heat your water. 


The government have also extended the relief to the preparatory groundworks required for installation of ground or water source heat pumps however, the only groundworks which qualify are those such as the digging of trenches or the dredging of a body of water in order to install pipework or other equipment necessary for a ground source or water source heat pump.


Items on the existing list of energy saving materials covered by the zero rate which came into force in May 2023 include:


Controls for central heating and hot water systems

Draught stripping


Solar panels

Wind turbines

Water turbines

Ground source heat pumps

Air source heat pumps

Micro combined heat and power units

Wood- fuelled boilers


 Solar panels at Seymour Barn in Dorset


Further details and eligibility information can be found on the government website here and our Owner Support Team are always happy to help on 01326 555500.


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