VAT rate for energy storage power stations

Will a VAT cut increase demand for home battery energy storage?

“The cut in VAT is exceedingly welcome and we have every expectation that it will increase demand for home battery energy storage,” said Chris Hewett, chief executive of trade association Solar Energy UK. “By allowing solar power to be used after dark, it can double the savings offered by home solar power systems.

Are fuel and power supplies subject to VAT?

Unless otherwise specified legal references will be from the VAT Act 1994 (VATA 1994). Under the act supplies of fuel and power are subject to the standard rate of VAT unless they are eligible for the reduced rate under schedule 7A or being exported outside the UK under the conditions set out in VAT on goods exported from the UK (VAT Notice 703).

What does the new zero VAT rate for battery storage mean?

As of the 1st February, some retrofit batteries now benefit from zero rate VAT, allowing homeowners who have historically fitted solar PV to more cost-effectively update their system to include electrical energy storage.

Can I get VAT relief if I install a solar energy system?

Previously, VAT relief was only available for domestic BESS if installed together with a new solar energy system. As of Feb. 1, a VAT zero rate will also apply to retrofitted residential BESS. The VAT relief also applies to BESS when installed in charitable buildings.

Are battery storage systems subject to VAT?

As from February 1, 2024, all battery storage systems installed in UK homes benefit from a VAT exemption regardless of whether they are fitted at the same time as solar PV. This equals the playing field for retrofit applications which previously would have been subject to 20% VAT.

Is electricity subject to VAT?

Electricity Electricity supplied for a qualifying use (read section 3) is subject to the reduced rate. Supplies of not more than an average rate of 33 kilowatt hours per day, 1,000 kilowatt hours per month, of electricity to one customer at any one of the customer’s premises are subject to VAT at the reduced rate.