Home battery storage now costs 20% less for everyone in the UK – here’s why
The UK government has announced a significant change that will make home battery storage more affordable for all residents. As of February 1, 2024, value-added tax (VAT) on battery storage installations in private homes has been reduced to zero. This means that people installing battery storage systems will no longer have to pay the standard 20% VAT rate, making these systems much more wallet-friendly.
Previously, VAT exemption for domestic battery storage was only applicable if combined with solar panels. However, the recent move extends the tax exemption to retrofitted residential battery storage as well. This new policy is expected to benefit over 1.2 million homes in the UK that already have rooftop solar installations, allowing them to take advantage of the tax cut.
In addition to battery storage installations, the updated law also extends the VAT exemption to water-source heat pumps and smart diverters. The inclusion of these energy-saving technologies aims to promote the adoption of sustainable energy practices.
The decision to remove VAT on battery storage installations is seen as a crucial step in the UK’s efforts to achieve the Paris Agreement goal of reaching net-zero emissions by 2050. By making these systems more affordable, the government hopes to encourage widespread adoption of renewable energy and storage solutions.
Commenting on the tax cut, Chris Hewett, the chief executive of Solar Energy UK, expressed his enthusiasm and highlighted the potential benefits of battery storage systems. Hewett stated, The cut in VAT is exceedingly welcome and we have every expectation that it will increase demand for home battery energy storage. Allowing solar power to be used after dark can double the savings offered by home solar power systems. There has never been a better time to upgrade than today.
It is important to note that the zero VAT rate for the installation of energy-saving materials, including solar panels and battery storage, is scheduled to remain in effect until March 31, 2027. This long-term tax break is part of the UK’s commitment to transitioning to a greener and more sustainable future.
In comparison to the United States, where a 30% tax credit is available for solar and storage installations, the UK’s 20% upfront discount may seem modest. However, it is worth noting that in the US, the tax credit needs to be filed with the Internal Revenue Service (IRS) after the installation is complete, whereas in the UK, the VAT reduction is applied directly at the point of purchase.
To make the most of the VAT exemption and take advantage of the reduced cost of home battery storage, UK residents are encouraged to explore solar and storage options. By going solar with a battery storage system, homeowners can not only reduce their carbon footprint but also ensure greater resilience against power outages.
If you are considering solar and battery storage, it is advisable to consult trusted and reliable solar installers who offer competitive pricing. EnergySage, a free service, assists homeowners in finding pre-vetted solar installers who can provide high-quality solutions at discounted prices. By using this service, consumers can save between 20% and 30% compared to pursuing these installations independently.
In conclusion, the UK’s decision to eliminate VAT on home battery storage installations marks a significant milestone in the country’s push towards cleaner and more sustainable energy. As the cost of energy-saving technologies continues to decline, it becomes increasingly accessible to a wider population. With the VAT reduction in effect, more homeowners can now consider investing in battery storage, solar panels, and other energy-saving measures, contributing to the UK’s mission to achieve a net-zero future.
