A plain-English guide for homeowners, businesses, and our team
VAT can be confusing at the best of times — and in the solar industry, the rules vary depending on who the customer is, what type of property is involved, and whether you’re contracting directly or as part of a larger build. This guide breaks it down simply so that homeowners, business owners, and our own team all know exactly what to expect.
Quick Reference: VAT Rates at a Glance
Here’s a summary of the most common scenarios we deal with at Synergy PV Renewables:
| Scenario | VAT Rate | Customer Type | Notes |
| Domestic New Install | 0% | Homeowner (B2C) | Zero-rated until 31 March 2027 |
| Domestic Repairs & Maintenance | 5%* | Homeowner (B2C) | *May be 20% if no qualifying install element — check with accountant |
| Commercial New Install | 20% | Business (B2B) | VAT-registered businesses can reclaim this |
| Subcontract / CIS Works | 20% RC | Main Contractor (B2B) | Domestic Reverse Charge — customer accounts for VAT |
1. Domestic New Installations — 0% VAT
| 0% | Zero-rated until 31 March 2027 (currently) |
If you’re a homeowner having a solar PV system, battery storage, or both installed at your home, you currently pay no VAT at all on the supply and installation.
This zero rate was introduced by the UK Government in April 2022 as part of its commitment to making renewable energy more accessible. It applies to:
- Solar PV panels, cabling, control panel and inverter
- Battery storage systems (standalone or installed alongside solar)
- Charitable buildings (from February 2024 onwards)
Important: This zero rate is time-limited. After 31 March 2027, VAT will revert to 5% on residential installations. So if you’re considering going solar, sooner is better.
2. Domestic Repairs & Maintenance — 5% (with caveats)
| 5%* | Reduced rate applies in most cases — but not always |
When we return to an existing domestic solar installation to carry out servicing, fault-finding, or repairs, the work typically falls under the reduced VAT rate of 5%. This applies because the work relates to energy-saving materials already installed in a residential property.
However, there’s an important grey area here:
- If the work involves a qualifying installation element (e.g. replacing a faulty panel or inverter as part of a repair), 5% is likely to apply.
- If it’s a straightforward call-out or labour-only service with no qualifying installation component, HMRC may consider this standard rated at 20%.
Our advice: We apply 5% to maintenance work on qualifying residential systems as standard practice, but this is an area worth discussing with your accountant to ensure your specific scope of work is treated correctly.
3. Commercial Installations — 20% Standard Rate
| 20% | Standard VAT applies to all commercial solar work |
For any solar PV or battery storage installation on a commercial property — whether that’s an office, warehouse, retail unit, or industrial site — standard rate VAT of 20% applies to the full supply and installation.
This covers:
- Solar panels and all associated equipment
- Battery storage on commercial premises
- Labour and installation services
The good news for most businesses: if you’re VAT-registered (which most businesses with a turnover above £90,000 are), you can reclaim this VAT in full on your next quarterly return. This means the net cost to your business is effectively the same as if no VAT had been charged — it’s simply a cashflow consideration.
Non-VAT-registered businesses will bear the full 20% as an additional cost, which should be factored into any ROI calculations.
4. Subcontract & CIS Work — 20% Reverse Charge
| 20% RC | Domestic Reverse Charge — the customer accounts for VAT, not us |
This one is less well known, but critically important for our team to understand — particularly on larger projects where we’re working as a subcontractor beneath a main contractor (such as a developer or principal contractor on a new build or commercial fit-out).
Under the Construction Industry Scheme (CIS) Domestic Reverse Charge, when we supply construction services to another VAT-registered business in the CIS chain:
- We do not charge or collect VAT on our invoice.
- Instead, the main contractor (our client) accounts for the VAT themselves via their own VAT return.
- Our invoice must clearly state: “Reverse Charge VAT applies” and show £0 VAT collected.
This rule exists to prevent VAT fraud in the construction supply chain. Getting this wrong — either by charging VAT when you shouldn’t, or failing to apply it when you should — can create issues for both parties. If you’re ever unsure whether reverse charge applies to a job, ask before you invoice.
Summary
To recap the four key scenarios:
- Domestic homeowner, new install = 0% VAT (until March 2027)
- Domestic repair or maintenance = 5% in most cases
- Commercial installation = 20% (reclaimable for VAT-registered businesses)
- Subcontract/CIS works = 20% Reverse Charge (customer accounts for VAT)
Understanding your VAT position is an important part of budgeting for any solar project, and it’s something we’re always happy to talk through with you before you commit. If you have any questions, don’t hesitate to get in touch with the team at Synergy PV Renewables.
Disclaimer
This article is intended as general guidance only and does not constitute tax or legal advice. VAT rules can change and individual circumstances vary. We recommend consulting a qualified accountant or tax adviser for advice specific to your situation. Information correct as of early 2025 based on HMRC guidance.
Synergy PV Renewables Ltd | Hemel Hempstead | www.synergypvrenewables.co.uk
