Tax Relief on Solar Battery Storage Systems

As of February 1st, 2024 - In a move towards energy efficiency, the UK Government has removed the VAT charge for domestic battery energy storage systems (BESS) in all circumstances.

Previously the VAT relief policy was limited to just the batteries installed alongside solar panels. The government policy to grant VAT relief now includes both standalone battery installations and retrofitted batteries as well. This is a long awaited groundbreaking moment for the energy storage sector.

So what exactly is changing ?

In its Spring Statement 2022, the government announced the expansion of VAT relief on energy-saving materials (ESMs). This was very much a welcome step, however those expansions did not go far enough.

After listening to calls from industry, the government then launched a Call for Evidence (CfE) aimed at seeking views on potential areas of further reform. As a result of this CfE, the government is rolling out an expansion of VAT relief which includes Electrical battery storage , Water-source heat pumps and Diverters retrofitted to ESMs such as Solar panels and wind turbines.

Which type of battery storage projects are included ?

The Following are included from the perspective of battery storage:

• Battery storage added alongside solar PV - So - A battery / or batteries fitted at the same time as the solar panels will be exempt from 20% VAT.
• Standalone battery storage – (NEW) - Projects in which a battery is fitted without solar. In these scenarios, homeowners can make use of smart tariffs to charge their battery cheaply overnight. Situations where a battery is fitted without solar - will be exempt from 20% VAT.
• Retrofit batteries – (NEW) - Projects in which a battery is retrofitted to an existing solar array - will be exempt from 20% VAT.

Alignment with UK environmental objectives

It is clear that this VAT relief is perfectly aligned with the UK's environmental goals, with the offer of financial incentives for homeowners to invest in energy storage. PDS Eco Ltd often install battery storage systems supplied by GivEnergy who also welcome this progressive move by the government. (Read the full article - UK government announces tax relief on battery storage systems - on the GivEnergy website.)