0% VAT on solar, heat pumps and insulation ends 31 March 2027
Energy-saving installations are VAT-free until 31 March 2027. What that is worth on solar panels, heat pumps and insulation, and how to plan the work.
Installing energy-saving materials in a home is charged at 0% VAT until 31 March 2027. That covers heat pumps, insulation, solar panels and batteries. On a typical solar system with a battery, now around £12,500, a heat pump at £13,000 or external wall insulation at £26,000, the relief is worth a fifth of the price again compared with the standard 20% rate. If one of these jobs is on your list, the deadline is the date to plan around.
What the 0% rate covers
The relief applies to the installation of energy-saving materials in homes. The categories that matter for most households are:
- Heat pumps, air source and ground source
- Insulation
- Solar panels
- Batteries
The relief is tied to installation. If you are thinking of buying panels, batteries or insulation yourself and paying someone only to fit them, do not assume the same rate applies to what you bought; ask your installer how the invoice will be set out before you order anything.
What it is worth: live figures
Our estimates for these jobs already use the 0% rate. The table shows the typical price now; the same job at the standard 20% rate would cost a fifth more on top.
| Job | Typical price at 0% VAT | Usual range |
|---|---|---|
| 6 kWp solar panels, no battery | £9,500 | £7,400 – £12,300 |
| 6 kWp solar panels with 5 kWh battery | £12,500 | £9,750 – £16,200 |
| 8 kW air source heat pump (before grant) | £13,000 | £10,100 – £16,800 |
| External wall insulation, 150 m² of wall | £26,000 | £20,300 – £33,800 |
As a rule of thumb, multiply any of these by 1.2 to see what the same work would cost at 20% VAT. The difference grows with the size of the job, which is why it matters most for heat pumps and whole-house insulation.
We build each figure from the work involved: labour hours for each trade, multiplied by local rates, plus equipment and materials, checked against market prices and real quotes. Select your area on the cost guides to see local prices: Solar panels, Air source heat pump and External wall insulation.
Heat pumps: VAT relief plus the grant
For a heat pump, the VAT relief sits alongside the Boiler Upgrade Scheme in England and Wales, which takes £7,500 off an air source or ground source heat pump when the installer is MCS certified. Our heat pump figure is shown before that grant. In Scotland, Home Energy Scotland offers a grant of up to £7,500, plus an optional interest-free loan of up to £7,500.
The two work together: you pay no VAT on the installation and the grant comes off the price. Leaving the job until after March 2027 puts the VAT part of that saving at risk.
Plan backwards from the deadline
The relief runs until 31 March 2027. We cannot tell you what rate will apply to this work after that date, so the sensible plan is to assume the relief ends and work back from it.
Which rate applies depends on the VAT rules about when the work is done and paid for, not on when you first asked for a quote, so a deposit alone may not lock in the 0% rate for a job finished later. Ask your installer to confirm in writing how they will treat the invoice if the job slips past the deadline.
A realistic timeline for each job:
- Solar panels and batteries. Surveys, design and scaffolding booking take time, and installers get busy ahead of any deadline. Aim to have quotes in hand by the end of 2026.
- Heat pumps. Allow time for a heat-loss survey, MCS paperwork, possible radiator changes and the grant. This is the job with the longest lead time; start early.
- External wall insulation. It needs dry weather for rendering and weeks of scaffolding. A job pushed into late winter can be delayed by the weather, so do not leave it to February.
Combine jobs where it makes sense
Scaffolding is a significant part of both solar panels and external wall insulation. If you plan both, doing them in the same window means you pay for scaffolding once, and both jobs fall under the 0% rate. The same logic applies to fitting a battery with new panels rather than adding it later.
Other help
The Warm Homes Plan, published in January 2026, commits £15bn to 2030, including grants for low-income households and low- or zero-interest loans that are being phased in. If your household might qualify, check before you sign, because a grant or cheap loan can cover part of the cost that the VAT relief does not.
Check the quote
Make sure the quote shows VAT explicitly at 0% for the qualifying work. Anything that is not energy-saving, such as roof repairs under the panels or redecorating after insulation, can be charged at the standard rate, and should be listed separately. Then compare the total with typical local prices using our "Is my quote fair?" tool: Is my quote fair?.