Effective February 1, 2024, the UK government has expanded the list of energy-saving materials (ESMs) eligible for VAT relief to include retrofitted and standalone battery energy storage systems. This significant policy change follows a recent consultation that recognised the crucial role battery storage plays in reducing households’ reliance on the national grid.
Previously, the 0% VAT rate on battery storage applied only when installed alongside other ESMs, such as solar panels. However, the government now acknowledges the standalone value of electrical battery storage systems in promoting energy independence and cost savings for homeowners. As a result, all home battery system installations, whether retrofitted to a qualifying ESM or installed as standalone units, will be VAT-free.
What Does 0% VAT on Battery Installations Mean for Homeowners?
This development is fantastic news for homeowners seeking to reduce energy costs and increase self-sufficiency. With the ongoing cost-of-living crisis and no energy bill discounts this winter, now is an ideal time to invest in battery storage.
By eliminating VAT, the initial investment in a home battery system will be effectively reduced by 20%, potentially saving homeowners thousands of pounds and accelerating the return on investment.
When Does the VAT Exemption for Battery Storage Systems Come Into Effect?
The new 0% VAT rate on battery storage installations will take effect on February 1, 2024, and will be applicable to homes throughout the UK. Other ESMs, including water-source heat pumps and retrofitted immersion diverters, have also been added to the VAT exemption list. Additionally, tax relief will extend to buildings used for charitable purposes as well as residences.
This 0% VAT rate on qualifying ESMs is set to last until March 31, 2027. After this period, VAT will increase to 5%, rather than reverting to the previous 20% rate. However, there is potential for the government to extend this exemption.
Benefits of Home Battery Storage
A home battery energy storage system allows you to store electricity for future use, offering several financial and environmental benefits:
Time-of-use optimisation: Charge your batteries during cheaper off-peak hours (e.g., Economy 7 tariff) and use stored electricity during peak hours to save on energy costs.
Increased self-consumption: When combined with domestic solar panels, batteries can store excess self-generated energy for use at night or during low solar production periods, such as winter.
EV integration: Many modern home EV chargers can integrate with battery storage systems, allowing you to use stored solar and grid energy to charge your vehicle as well as power your home.
By coupling batteries with renewable energy sources like solar panels, you can significantly reduce your fossil fuel use, cut your carbon footprint, and contribute to the UK’s climate change efforts.
Batteries can be used as standalone technologies, installed as part of a solar PV system, or retrofitted to existing solar panels. Thanks to the upcoming VAT reforms, all three types of battery installations will be exempt from VAT starting February 2024.
Get Started with VAT-Free Home Battery Storage Today...
At Evoflo, we specialise in fitting home battery storage solutions to help you maximize your energy savings and independence. Whether you’re retrofitting a battery to your existing solar panels or investing in a new solar PV system, our expert team is here to guide you every step of the way.
We are proud to offer exceptional quality, service, and value on all our installations, using the latest and most efficient components with extended warranties from leading manufacturers.
Ready to start saving with VAT-free home battery storage?
Contact us at 01308 805025, email julian@evoflo.energy, or visit our website to get a free, no-obligation quote today!
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