Is VAT on solar panels and heat pumps really going up in 2027?

Yes. The temporary 0% VAT rate on the installation of energy-saving materials — solar panels, batteries, heat pumps and more — in residential accommodation runs until 31 March 2027. From 1 April 2027 it reverts to the standard reduced rate that applied before the relief, unless the government announces an extension. No extension has been announced.

What VAT rate applies after 31 March 2027 — 5% or 20%?

5%, not 20%. The zero rate reverts to the 5% reduced rate that historically applied to the installation of energy-saving materials — it does not jump to the standard 20% rate. Some coverage of this deadline gets this wrong; HMRC's own guidance (Notice 708/6) is explicit that the fallback position is the reduced rate.

Does 0% VAT apply to air conditioning?

No. Air-to-air heat pumps and air conditioning units are not listed as qualifying energy-saving materials in HMRC's Notice 708/6, so they don't get 0% VAT (or the 5% reduced rate under this relief) at any point — before or after March 2027. Air conditioning support in the UK runs through a different route: see our guide to the £2,500 Boiler Upgrade Scheme grant for reversible air-to-air heat pumps.

What counts as an "energy-saving material"?

HMRC's list includes insulation; solar panels and photovoltaic (PV) systems; heat pumps (air source, ground source and water source); wind and water turbines; batteries for storing electricity generated by a qualifying microgeneration system; smart diverters; wood-fuelled boilers; central heating and hot water system controls; and draught stripping. Air-to-air heat pumps and general air conditioning are not on this list.

Does the 0% rate cover installation labour or just equipment?

It covers the installation of the materials — both the qualifying equipment and the labour to fit it — in residential accommodation. Groundworks that are necessary to install a heat pump (such as digging for ground loops) also qualify under the same relief.

Is the VAT rule the same in Northern Ireland?

The relief applies across the UK, but it started on a different date in Northern Ireland: 1 May 2023, versus 1 April 2022 in Great Britain. Both nations are currently due to see the rate revert on the same date, 31 March 2027, under the rules as they stand.

Should I book my solar or heat pump installation before the deadline?

If timing is flexible, booking before 31 March 2027 locks in the 0% rate rather than the 5% rate that follows. On an illustrative £10,000 install (an example figure, not a market price), that's the difference between paying £10,000 and £10,500. Confirm the applicable rate with your installer at the time of booking, since VAT rules can change with notice.

Is VAT on solar panels and heat pumps really going up in 2027?

Yes. The temporary 0% VAT rate on the installation of energy-saving materials — solar panels, batteries, heat pumps and more — in residential accommodation runs until 31 March 2027. From 1 April 2027 it reverts to the standard reduced rate that applied before the relief, unless the government announces an extension. No extension has been announced.

What VAT rate applies after 31 March 2027 — 5% or 20%?

5%, not 20%. The zero rate reverts to the 5% reduced rate that historically applied to the installation of energy-saving materials — it does not jump to the standard 20% rate. Some coverage of this deadline gets this wrong; HMRC's own guidance (Notice 708/6) is explicit that the fallback position is the reduced rate.

Does 0% VAT apply to air conditioning?

No. Air-to-air heat pumps and air conditioning units are not listed as qualifying energy-saving materials in HMRC's Notice 708/6, so they don't get 0% VAT (or the 5% reduced rate under this relief) at any point — before or after March 2027. Air conditioning support in the UK runs through a different route: see our guide to the £2,500 Boiler Upgrade Scheme grant for reversible air-to-air heat pumps.

What counts as an "energy-saving material"?

HMRC's list includes insulation; solar panels and photovoltaic (PV) systems; heat pumps (air source, ground source and water source); wind and water turbines; batteries for storing electricity generated by a qualifying microgeneration system; smart diverters; wood-fuelled boilers; central heating and hot water system controls; and draught stripping. Air-to-air heat pumps and general air conditioning are not on this list.

Does the 0% rate cover installation labour or just equipment?

It covers the installation of the materials — both the qualifying equipment and the labour to fit it — in residential accommodation. Groundworks that are necessary to install a heat pump (such as digging for ground loops) also qualify under the same relief.

Is the VAT rule the same in Northern Ireland?

The relief applies across the UK, but it started on a different date in Northern Ireland: 1 May 2023, versus 1 April 2022 in Great Britain. Both nations are currently due to see the rate revert on the same date, 31 March 2027, under the rules as they stand.

Should I book my solar or heat pump installation before the deadline?

If timing is flexible, booking before 31 March 2027 locks in the 0% rate rather than the 5% rate that follows. On an illustrative £10,000 install (an example figure, not a market price), that's the difference between paying £10,000 and £10,500. Confirm the applicable rate with your installer at the time of booking, since VAT rules can change with notice.

Is 0% VAT on solar panels and heat pumps ending?

Last checked: 12 September 2026. Every figure below is sourced and linked — see sources & cited data at the bottom.

Yes. The 0% VAT rate on installing energy-saving materials — solar panels, batteries, heat pumps and more — in residential accommodation is due to end on 31 March 2027, after which it reverts to the 5% reduced rate, not 20%. Air conditioning was never covered by this relief — a standard air conditioner or air-to-air heat pump doesn’t qualify for 0% VAT now or after the deadline. See our air conditioning grant guide for the limited support that does exist for reversible air-to-air heat pumps via the Boiler Upgrade Scheme.

The VAT rates, in one table

System	Rate now	Rate from 1 April 2027
Solar panels / PV, batteries, heat pumps, insulation	0%	5%
Wind and water turbines	0%	5%
Wood-fuelled boilers, heating/hot water controls, draught stripping	0%	5%
Air conditioning (air-to-air heat pump)	Not covered	Not covered

Source: gov.uk — VAT Notice 708/6. The zero rate runs from 1 April 2022 in Great Britain and 1 May 2023 in Northern Ireland, until 31 March 2027.

What’s covered, and what isn’t

✅ Insulation — of walls, floors, lofts and roofs.
✅ Solar panels and photovoltaic (PV) systems.
✅ Heat pumps — air source, ground source and water source.
✅ Wind and water turbines.
✅ Batteries for storing electricity generated by a qualifying microgeneration system, and smart diverters.
✅ Wood-fuelled boilers, central heating and hot water system controls, and draught stripping.
✅ Groundworks necessary for a heat pump installation — such as digging for ground loops.
❌ Air conditioning and air-to-air heat pumps are not covered — they aren’t listed as qualifying energy-saving materials in Notice 708/6, so this relief doesn’t apply to them at 0% or 5%. The relevant support route instead is the £2,500 Boiler Upgrade Scheme grant for reversible units that replace your home’s heating.

Source: gov.uk — VAT Notice 708/6.

What the change is worth in practice

On an illustrative £10,000 install (an example figure, not a market price), 0% VAT costs £10,000; at 5% it would be £10,500 — a £500 difference. The saving scales with the size of the job: a larger solar-and-battery install has proportionally more VAT at stake than a small controls upgrade.

Worth knowing before you book

The deadline and the rate are both confirmed — but rules can move

The 31 March 2027 end date and the reversion to the 5% reduced rate come from the legislation currently in force — The Value Added Tax (Installation of Energy-Saving Materials) Order 2022 (SI 2022/361) — and HMRC’s Notice 708/6. No extension to the 0% rate has been announced. Because tax policy can change with little notice, confirm the applicable rate with your installer at the time you book, particularly if your installation date is close to the deadline.

This VAT relief is separate from the Boiler Upgrade Scheme grant — it isn’t gated on MCS certification. The 0% (soon 5%) rate applies to the VAT charged on the installed material itself, regardless of whether the job also qualifies for a BUS grant.

Thinking about air conditioning instead?

Air conditioning isn’t covered by this VAT relief. See what support actually exists for reversible air-to-air heat pumps and get quotes for your installation.

Get free installation quotes →

Book before the 31 March 2027 deadline

Find MCS-certified solar, battery and heat-pump installers in your area and lock in the 0% rate before it reverts to 5% on 1 April 2027.

Find MCS-certified installers →

More on grants, VAT and air conditioning

Is there a grant for air conditioning in the UK? →

The £7,500 Boiler Upgrade Scheme grant, explained →

Plug-in solar panels UK — what they are and how they work →

£500 EV charger grant — same 31 March 2027 deadline →

The Warm Homes Plan — the government policy behind these schemes →

FAQ

0% VAT on energy-saving materials — frequently asked questions

Is VAT on solar panels and heat pumps really going up in 2027?: Yes. The temporary 0% VAT rate on the installation of energy-saving materials — solar panels, batteries, heat pumps and more — in residential accommodation runs until 31 March 2027. From 1 April 2027 it reverts to the standard reduced rate that applied before the relief, unless the government announces an extension. No extension has been announced.
What VAT rate applies after 31 March 2027 — 5% or 20%?: 5%, not 20%. The zero rate reverts to the 5% reduced rate that historically applied to the installation of energy-saving materials — it does not jump to the standard 20% rate. Some coverage of this deadline gets this wrong; HMRC's own guidance (Notice 708/6) is explicit that the fallback position is the reduced rate.
Does 0% VAT apply to air conditioning?: No. Air-to-air heat pumps and air conditioning units are not listed as qualifying energy-saving materials in HMRC's Notice 708/6, so they don't get 0% VAT (or the 5% reduced rate under this relief) at any point — before or after March 2027. Air conditioning support in the UK runs through a different route: see our guide to the £2,500 Boiler Upgrade Scheme grant for reversible air-to-air heat pumps.
What counts as an "energy-saving material"?: HMRC's list includes insulation; solar panels and photovoltaic (PV) systems; heat pumps (air source, ground source and water source); wind and water turbines; batteries for storing electricity generated by a qualifying microgeneration system; smart diverters; wood-fuelled boilers; central heating and hot water system controls; and draught stripping. Air-to-air heat pumps and general air conditioning are not on this list.
Does the 0% rate cover installation labour or just equipment?: It covers the installation of the materials — both the qualifying equipment and the labour to fit it — in residential accommodation. Groundworks that are necessary to install a heat pump (such as digging for ground loops) also qualify under the same relief.
Is the VAT rule the same in Northern Ireland?: The relief applies across the UK, but it started on a different date in Northern Ireland: 1 May 2023, versus 1 April 2022 in Great Britain. Both nations are currently due to see the rate revert on the same date, 31 March 2027, under the rules as they stand.
Should I book my solar or heat pump installation before the deadline?: If timing is flexible, booking before 31 March 2027 locks in the 0% rate rather than the 5% rate that follows. On an illustrative £10,000 install (an example figure, not a market price), that's the difference between paying £10,000 and £10,500. Confirm the applicable rate with your installer at the time of booking, since VAT rules can change with notice.

Sources & cited data

VAT on energy-saving materials and heating equipment (Notice 708/6) — https://www.gov.uk/guidance/vat-on-energy-saving-materials-and-heating-equipment-notice-7086
The Value Added Tax (Installation of Energy-Saving Materials) Order 2022 (SI 2022/361) — https://www.legislation.gov.uk/en/uksi/2022/361
Tax on shopping and services — energy-saving products — https://www.gov.uk/tax-on-shopping/energy-saving-products

Last checked 12 September 2026. This page tracks a VAT relief scheduled to change on 31 March 2027 — rules can move before then. Confirm the current position with an MCS-certified installer before booking work close to the deadline.