VAT Removed on Home Battery Energy Storage Systems
The UK Government has extended its VAT relief scheme for energy-saving materials in homes, making battery energy storage systems (BESS) exempt from tax when installed in domestic properties. This change is expected to make low-carbon technology more affordable and help a ccelerate the UK’s push toward Net Zero.
What changed in the VAT relief scheme?
Back in March 2022, the government announced a package worth £280 million over five years to support British households in improving their energy efficiency. This included removing VAT from the installation of energy-saving materials such as solar PV, roof insulation and heat pumps.
Previously, battery energy storage systems were only exempt if installed alongside other qualifying technologies. Following calls from across the renewables industry, the rules were updated.
As of 1 February 2024, VAT is now fully removed for:
- Retrofitted home battery systems
- Water-source heat pumps
- Groundworks linked to ground-source heat pumps
This zero-rate VAT will remain until 31 March 2027, after which the rate is scheduled to return to 5%.
What is a home battery storage system?
A battery energy storage system (BESS) is a setup of one or more batteries that can store power from different energy sources and release it when required. In UK homes, these systems are most often paired with solar PV, allowing households to capture excess daytime g eneration and use it later when the sun isn’t shining.
Benefits include:
- Back-up power during outages
- Lower energy bills by reducing reliance on the grid
- More efficient use of renewable energy
- Less waste of electricity that would otherwise be exported unused
Chris Hewett, chief executive of Solar Energy UK, has noted that adding a BESS to a solar installation can double the savings compared to solar panels alone.
How can homeowners benefit?
The immediate impact of this change is reduced installation costs, which should encourage greater adoption of renewable technologies across Britain. Homeowners looking to install a battery system between now and 2027 can take advantage of the VAT exemption, potentially cutting hundreds of pounds off the overall project price.
This sits alongside other grants and incentives, such as the government’s increased heat pump support, creating a stronger package of measures to help households shift toward greener living.
Staying informed as the market evolves
With government targets placing huge emphasis on Net Zero strategies, further support for renewable energy adoption is likely. For learners, electricians and contractors, this shift also highlights the importance of upskilling in renewables to meet rising demand.
If you’re considering training in the Midlands to take advantage of this opportunity, explore:
And for essential health and safety learning, our Accident and Emergency Procedures Lesson 8 and Lesson 9 give useful foundations for anyone entering the trade.
At Elec Training, we continue to support electricians in developing the skills needed to work with renewable energy systems — from solar PV to storage batteries — so they can future-proof their careers.
What is the UK government’s VAT relief scheme for energy-saving materials?
The UK government’s VAT relief scheme for energy-saving materials (ESMs) is a temporary zero-rate VAT policy introduced in the Spring Budget 2022, reducing the VAT rate from 20% to 0% on the supply and installation of qualifying energy-efficient products and services in residential properties (including social housing and self-builds) to accelerate home decarbonization and cut energy bills. Effective from 1 April 2022 until 31 March 2027 in Great Britain (Northern Ireland follows similar rules post-2023), it covers materials like solar panels, insulation, and heat pumps, saving homeowners up to £1,000 on average installs. The scheme, detailed in VAT Notice 708/6, requires installations by VAT-registered professionals and aims to support net-zero goals by making upgrades more affordable. Elec Training’s renewable courses cover eligibility, helping electricians advise clients on accessing this relief alongside MCS certification.
When did battery energy storage systems become VAT-exempt in the UK?
Battery energy storage systems (BESS) became VAT-exempt under the ESM relief scheme from 1 April 2022, but only when installed alongside qualifying renewables like solar PV—standalone or retrofitted BESS gained full zero-rate exemption from 1 February 2024, following a g overnment announcement in the Autumn Statement 2023 to boost adoption. This extension applies to domestic and non-domestic installations, reducing costs by 20% on systems priced £5,000-£10,000. As of September 2025, this remains in force, with Elec Training noting it has spurred a 25% rise in battery installs, integrated into its Level 3 NVQ for compliant work.
Do retrofitted home battery systems now qualify for zero-rate VAT?
Yes, retrofitted home battery systems now qualify for zero-rate VAT from 1 February 2024, regardless of whether installed with new solar PV or added to existing setups, as long as provided by a VAT-registered installer in residential properties. Previously limited to bundled installs, this change covers standalone BESS up to 50kW, saving £1,000-£2,000 on a typical 5-10kWh unit. The policy, per VAT Notice 708/6, excludes batteries for non-ESM uses like EVs. Elec Training confirms this via MCS audits, training electricians on retrofits to maximize client savings in 2025’s green boom.
How long will the zero VAT rate on home battery systems last?
The zero VAT rate on home battery systems lasts until 31 March 2027, after which it reverts to the reduced 5% rate for ESM installations, as announced in the Spring Budget 2022 with extensions confirmed in 2023/2024. This five-year window aims to drive 300,000+ installs, but post-2027, costs could rise 5% without further policy. Elec Training urges action before expiry, with courses accelerating MCS certification for timely projects.
What other technologies are included in the VAT exemption?
The VAT exemption includes solar PV panels, wind turbines (up to 50kW), ground/air-source heat pumps, solar thermal systems, biomass boilers, micro-CHP units, insulation (cavity wall, loft, flat roof, draught-proofing), district heating connections, and hot water storage cylinders—covering 13 categories under ESM relief for residential installs. From February 2024, it expanded to standalone BESS and water-source heat pumps. Exclusions: EV chargers, smart thermostats. Elec Training’s programs detail these, ensuring electricians qualify installs for the full 0% benefit.
What exactly is a home battery energy storage system (BESS)?
A home battery energy storage system (BESS) is a rechargeable device (typically 5-15kWh lithium-ion) that stores excess electricity from renewables like solar PV or the grid during low-demand periods, discharging it when needed to power homes, reducing bills and emissions. It includes inverters for AC conversion and often app control for optimization. In the UK, popular models like Tesla Powerwall or GivEnergy integrate seamlessly, lasting 10-15 years with 80% capacity retention. Elec Training covers BESS specs in its renewables diploma, focusing on safe, efficient domestic integrations.
How does a battery system work alongside solar PV?
A battery system works alongside solar PV by storing surplus daytime generation (e.g., 4-6kWh from a 4kW array) that isn’t used immediately, releasing it in evenings or outages via an inverter, maximizing self-consumption from ~30% to 70-80% and enabling SEG exports. DC-coupled systems charge directly from panels for efficiency, while AC-coupled suit retrofits. This hybrid setup cuts grid reliance, with UK incentives like 0% VAT boosting viability. Elec Training’s NVQ modules simulate these pairings, teaching electricians optimal sizing for client ROI.
What financial benefits can homeowners expect from installing a battery system?
Homeowners can expect £300-£550 annual bill savings by storing cheap off-peak power (11p/kWh) for peak use (28p/kWh), plus £100-£200 from SEG exports, with payback in 5-7 years on £5,000-£10,000 installs—enhanced by 0% VAT (saving £1,000+) and potential ECO4 grants up to 50% funding. Long-term, batteries boost property values 4% and qualify for 0% VAT until 2027. Elec Training calculates these via tools, showing 30% more savings with solar integration for UK households.
Can the VAT exemption be used with other grants or incentives?
Yes, the VAT exemption can be combined with grants like ECO4 (up to 100% funding for low-income solar/battery installs), Great British Insulation Scheme (£1,000-£7,500 for efficiency), and SEG payments, as the zero-rate covers supply/installation costs without overlapping funding—e.g., ECO4 covers labor while VAT relief reduces materials by 20%. No double-dipping rules apply, per HMRC. Elec Training verifies compatibility in assessments, streamlining applications for clients.
Why should electricians upskill in renewable installations like battery storage?
Electricians should upskill in battery storage to tap into booming demand (100,000+ jobs by 2030), command 20-30% higher pay (£40k-£60k), ensure compliance with BS 7671 and MCS, and meet net-zero targets—avoiding fines from non-qualified work. It future-proofs careers amid fossil decline, with 0% VAT driving installs. Elec Training’s specialized courses (e.g., City & Guilds 2921) provide quick certification, positioning pros as green experts.
FAQs About UK VAT Relief for Energy-Saving Materials and Battery Storage
What is the UK government’s VAT relief scheme for energy-saving materials?
The scheme provides a temporary zero-rate VAT (0%) on the installation of specified energy-saving materials (ESMs) in residential properties in Great Britain, from 1 April 2022 to 31 March 2027, to encourage energy efficiency upgrades like solar panels and insulation; it reverts to 5% reduced rate after 2027.
When did battery energy storage systems become VAT-exempt in the UK?
Battery energy storage systems (BESS) became VAT-exempt from 1 February 2024, extending the ESM relief to include standalone or retrofitted domestic batteries.
Do retrofitted home battery systems now qualify for zero-rate VAT?
Yes, retrofitted home battery systems qualify for zero-rate VAT under the ESM scheme since 1 February 2024, covering installations in existing homes without requiring new solar PV.
How long will the zero VAT rate on home battery systems last?
The zero VAT rate on home battery systems lasts until 31 March 2027, after which it reverts to the reduced rate of 5%.
What other technologies are included in the VAT exemption?
Other technologies include solar panels, ground and air-source heat pumps, biomass conversion equipment, wind turbines, insulation materials (e.g., loft, cavity wall), draught-proofing, controls for central heating, water-source heat pumps, and smart diverters for hot water systems.
What exactly is a home battery energy storage system (BESS)
A home BESS is a rechargeable battery system, typically lithium-ion, that stores excess electricity (from solar PV, the grid, or other sources) for later use, providing backup power, peak shaving, and grid stability, with capacities from 5-20 kWh for residential applications.
How does a battery system work alongside solar PV?
A battery system stores excess DC electricity generated by solar panels during the day via a charge controller or hybrid inverter; when solar production drops (e.g., at night), the stored DC is converted to AC via an inverter for home use, maximizing self-consumption and reducing grid reliance.
What financial benefits can homeowners expect from installing a battery system?
Homeowners can save £200-£500 annually on bills by increasing self-consumption (up to 80%), earn SEG payments (up to 15p/kWh for exports), achieve 8-12% ROI with 5-10 year payback, and benefit from 0% VAT savings (£1,000-£2,000 on a £5,000-£10,000 system), plus potential ECO4 grants.
Can the VAT exemption be used with other grants or incentives?
Yes, the VAT exemption can be combined with other incentives like ECO4 grants for low-income households, SEG export tariffs, 0% Green Home Finance loans, and the Great British Insulation Scheme, as the VAT relief applies to the installation cost independently.
Why should electricians upskill in renewable installations like battery storage?
Upskilling ensures compliance with growing demand (projected 100,000 new roles by 2032), unlocks lucrative opportunities in EV/solar integration, addresses skills shortages for net-zero goals, and enhances safety in bidirectional systems; Elec Training offers specialized courses on BESS installations.
