0% VAT: what actually qualifies
Solar panels, battery storage, heat pumps and insulation carry no VAT at all until 31 March 2027. Gas boilers do not, whatever anybody tells you. The difference is worth several hundred pounds on a typical job.
This is the simplest saving available on energy work and the one most often explained wrongly, usually by treating it as a discount rather than as a tax rate. It is a tax rate, it is time-limited, and it applies to the installation as well as the equipment.
What is zero-rated
The relief covers energy-saving materials installed in residential accommodation. On the work we do, that means:
- Solar panels
- Electrical storage batteries, including a battery retrofitted to an existing solar system
- Air source heat pumps
- Ground source heat pumps
- Insulation — loft, cavity wall, solid wall and the rest
Because it is a rate rather than a discount, it applies to the whole supply and install. The figure on the quotation is the figure you pay.
What is not
A gas boiler is not an energy-saving material and is not zero-rated. It reaches the reduced 5% rate only where the installation is grant funded and the household qualifies. Any quotation that shows 0% VAT on a straight boiler replacement is wrong, and it is the single most common error we see on other people's paperwork.
This is why the boiler pages on this site carry no VAT line at all. It would be an easy sentence to add and it would not be true.
What happens on 1 April 2027
The zero rate is temporary. From 1 April 2027 these measures revert to the reduced rate of 5% — not to the standard 20%. So the saving for acting before the deadline is five percent of the job, not twenty. That is still real money on a heat pump or a full solar and battery system, but it is worth being accurate about rather than using the deadline as pressure.
| Measure | Until 31 March 2027 | From 1 April 2027 |
|---|---|---|
| Solar PV | 0% | 5% |
| Battery storage | 0% | 5% |
| Air source heat pump | 0% | 5% |
| Insulation | 0% | 5% |
| Gas boiler | 20% (5% only if grant funded and eligible) | Unchanged |
Does it stack with a grant?
Yes. The VAT rate and the Boiler Upgrade Scheme are separate things and a heat pump installation gets both: the grant comes off the price, and the price carries no VAT. They are applied in the same quotation, so you see the effect of each rather than a single net number.
What you should see on a quotation
A quotation should show the work, the rate applied, and any grant deducted, as separate lines. If VAT is not itemised you cannot check it, and if the rate is wrong you will not find out until it is too late to matter.
Sources. VAT liability of energy-saving materials and heating equipment as published by HMRC in VAT Notice 708/6 on gov.uk, read 1 September 2026. Sections 2.7 (solar), 2.10 (insulation), 2.14 and 2.15 (heat pumps), 2.19 (storage batteries) and 3.2 (grant-funded boilers). VAT rates are set by government and change by announcement.