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0% VAT on Home Batteries: What It Means for You

Installed home batteries pay 0% VAT until 31 March 2027, then 5%. What that saves on a £5,000–£8,000 battery, and what a battery actually earns with solar, without solar, or fitted alongside new panels.

JME

JME Green Energy

JME Green Energy Team

May 11, 2025•Updated November 10, 2026•9 min read

Since 1 February 2024, installing a home battery in a house or flat has been zero-rated for VAT. That applies whether the battery is added to existing solar panels, fitted on its own and charged from the grid, or installed with new panels. The zero rate runs until 31 March 2027. After that, HMRC says these installations go to the reduced rate of 5%, not back to 20%. The Budget on 28 October 2026 didn't change this: the government's tax overview (updated 5 November 2026) confirms the rate goes to 5% from 1 April 2027.

This page sets out what the relief is worth in pounds, then does the harder sum: what a battery itself earns back. All figures were checked on 6 October 2026. Costs are published averages, not our prices.

At a Glance

0% VAT, then 5%

Installed home batteries are zero-rated until 31 March 2027, then due to carry 5% (HMRC). Buying a battery without installation is standard-rated.

What the relief is worth

On a £5,000–£8,000 battery (published averages, not our prices): £1,000–£1,600 against 20% VAT, or £250–£400 against the 5% due from April 2027.

Added to solar

About £120–£200 a year in our example, after battery losses and the export it gives up.

Without solar

About £150 a year on South Scotland Economy 7 rates versus a single-rate tariff, for a typical home.

Payback

Longer than the 10–15 years Home Energy Scotland expects a battery to last, in every example here. It suits some homes for other reasons.

What the zero rate covers

HMRC's VAT Notice 708/6 (section 2.19) lists three kinds of battery installation in residential accommodation that qualify:

a battery retrofitted to store electricity from solar panels, or from wind or water turbines;
a standalone battery that stores electricity from the grid;
a battery that stores electricity from both.

A battery installed as part of a new solar installation normally counts as part of that single zero-rated job.

Two conditions matter in practice:

It has to be installed. HMRC says that supplying energy-saving materials without installing them is standard-rated, so a battery bought from a retailer to fit yourself carries 20% VAT.
The date is when the job is supplied. The zero rate covers installations up to 31 March 2027. From 1 April 2027 the same installation is due to carry 5% VAT.

There is no application form or means test for the relief itself. The installer simply charges 0% on a qualifying job.

What the VAT relief is worth

VAT is charged on the price before VAT. The Energy Saving Trust puts a home battery at £5,000–£8,000, and Home Energy Scotland's battery page gives a cost of £8,000. These are published averages, not our prices, and we use them here as a price before VAT.

VAT rate	Battery at £5,000 / £8,000 before VAT
0%: installed by 31 March 2027	£5,000 / £8,000
5%: installed from 1 April 2027	£5,250 / £8,400
20%: bought without installation, or a retrofit before February 2024	£6,000 / £9,600

Rates from HMRC VAT Notice 708/6. Prices are published averages (Energy Saving Trust; Home Energy Scotland), not quotes.

So against the 20% that retrofit and standalone batteries paid before February 2024, the zero rate saves £1,000–£1,600. Against what is due from April 2027, installing before the deadline saves £250–£400 on the same battery. That is worth having, but it is not a reason to rush into a battery that doesn't suit your home.

What a battery is actually worth

A battery doesn't generate electricity. It moves it from one time to another, and it loses some on the way. So the useful question is not "how fast does a solar system pay back?" but "what does adding a battery change?" That depends on which of three situations you're in:

You already have solar panels. The battery stores daytime surplus you would otherwise export. You gain the import price on what comes back out, but you lose the export payment on everything you put in.
You have no solar. The battery charges from the grid on a cheap off-peak rate and runs the house later. You pay for the electricity that is lost in the round trip, and you move to a two-rate tariff whose daytime rate is higher than a normal single rate.
You're installing panels and a battery together. The panels' own figures, plus the battery's figures from situation 1.

Here are the sums for each one, using published figures and labelled assumptions.

Each uses a 5 kWh usable battery costing £5,000, the low end of the Energy Saving Trust's £5,000–£8,000 range (a published average, not our price), and assumes 90% of the energy put in comes back out. Electricity is valued at the Ofgem cap of 26.32p/kWh (1 October to 31 December 2026). Standing charges are left out: a battery does not reduce them.

1. Adding a battery to existing solar

It stores 1,000 kWh a year of solar you would otherwise have exported, on about 200 days when the panels make enough to fill it.

Comes back out1,000 kWh × 90%: 900 kWh
Bill saving900 kWh × 26.32p: £237
Export given up at 4.1p/kWh1,000 kWh × 4.1p: −£41
Export given up at 12p/kWh1,000 kWh × 12p: −£120

On 4.1p/kWh export: about £196 a year, 25.5 years to repay £5,000. On 12p/kWh: about £117 a year, 42.8 years.

2. A battery without solar

A typical 2,500 kWh-a-year home moves from Flexible Octopus (26.11p/kWh) to Flexible Octopus Economy 7 (14.84p/kWh off-peak, 31.83p/kWh the rest of the day), South Scotland rates on 10 November 2026. The battery fills off-peak every night of the year.

Single rate today2,500 kWh × 26.11p: £653
Bought off-peak to fill the battery1,825 kWh, of which 183 kWh is lost: 1,825 kWh
Two-rate cost with the batteryRemaining daytime use at 31.83p; battery and night use at 14.84p: £501
Standing charge (separate)Economy 7 standing charge is a little higher: +£2 a year

About £151 a year less on unit costs, 33.0 years to repay £5,000.

3. Solar and a battery together

Our payback page's 4.5 kWp example (£7,600) exports 1,800 kWh a year, enough to fill the same battery. The battery's sums are the same as in example 1. With 1,800 kWh used directly and 900 kWh back from the battery, the home uses 2,700 kWh of solar a year, so this example assumes a household using about 5,000 kWh a year, for instance with an EV or heat pump. The payback page's own battery illustration gives a slightly shorter payback because it moves more solar into home use (1,080 kWh a year) and leaves out storage losses; here the battery stores 1,000 kWh and returns 900 kWh.

Panels alone, 12p/kWh export£7,600 ÷ £690 a year: 11.0 years
Panels and battery£12,600 ÷ £807 a year: 15.6 years
Panels alone, 4.1p/kWh export£7,600 ÷ £548 a year: 13.9 years
Panels and battery£12,600 ÷ £743 a year: 16.9 years

Total payback rises from 11.0 years to 15.6 years on 12p/kWh export, and from 13.9 years to 16.9 years on 4.1p/kWh.

Simple payback: cost divided by the first year's gain. Home Energy Scotland says batteries tend to last 10–15 years. At 85% round-trip efficiency, example 1 falls to about £183 a year. Not modelled: capacity fade, price changes, financing, the battery's own standby use, and whether your evening use is large enough to empty it daily. An illustration, not a quote.

Why a battery on solar earns so little

Most of the export a battery takes in happens between March and September. In winter, a typical Scottish roof rarely makes enough surplus to fill even a small battery. The EU's PVGIS model (run 6 October 2026) gives a south-facing 5 kW system near Stirling about 12–19 kWh a day from March to September, but only about 3–7 kWh a day from November to February. That's why the example assumes the battery fills on about 200 days a year, not 365.

Every stored unit also costs you its export payment. For each unit that goes in, about 0.9 of a unit comes back out, worth about 23.7p at 26.32p. On a 12p export tariff you give up 12p of that, leaving under 12p a unit. On a 4.1p tariff it gives up much less, which is why a battery is worth most to people with a poor export rate.

Home Energy Scotland puts it plainly: adding a battery "can provide additional savings from your solar panels, but the battery doesn't always recoup the initial investment", and batteries "tend to last between 10-15 years". In every example above, simple payback is longer than that.

What limits a battery without solar

Economy 7 is the tariff most homes can get. The example uses Octopus's own South Scotland rates on 6 October 2026: 14.84p off-peak and 31.83p at other times, against 26.11p on its single-rate tariff. Your meter sets the off-peak hours, so check them first.
The daytime rate goes up. Any electricity the battery doesn't cover is now bought at 31.83p instead of 26.11p. That's why the example saves about £150 a year. The household in this example starts on a single-rate tariff and only moves to Economy 7 to charge the battery, so its saving is measured against the single rate it leaves. A household already on Economy 7 for another reason would compare Economy 7 with and without the battery instead, which in this example gives about £250 a year.
Cheaper overnight tariffs have conditions. Octopus Go (9.40p from 00:30 to 05:30 in South Scotland, checked 10 November 2026) needs an electric car charged at home. Octopus Flux needs solar panels, a battery, an MCS certificate and Octopus for both import and export.
Dynamic tariffs vary every half-hour. Agile-style tariffs can make a battery more valuable, but the gap between cheap and expensive periods changes daily, so we don't model one.

Can you make money exporting from a battery?

On Octopus Flux in South Scotland, checked 10 November 2026, off-peak import (02:00 to 05:00) was 15.87p and peak export (16:00 to 19:00) was 29.75p. Buying 5 kWh off-peak and selling the 4.5 kWh that comes back out at peak makes about 55p a day, or roughly £200 a year if you did it every single day. That is a ceiling, not a forecast. It assumes you don't need that electricity in the house, it adds wear to the battery, it needs solar to qualify for Flux, and the rates are variable.

When a battery is more likely to make sense

Not every reason to own a battery is about payback. A battery is more likely to suit you if:

your export rate is low, so the solar you store would otherwise sell for a few pence;
you use a lot of electricity in the evening, enough to empty the battery most days;
you have an electric car or a heat pump, which opens up time-of-use tariffs with a bigger cheap-rate gap (Octopus Go for EV owners, for example);
you want backup during power cuts. Only systems specified with backup can power your home in a grid outage. Many can't, so ask before you buy if this matters to you.

It is less likely to pay for itself if your export rate is already good, you use little electricity after dark, or you plan to move within a few years.

Funding: Home Energy Scotland

Home Energy Scotland's grant and loan scheme stopped funding solar panels and batteries for homeowners on 6 June 2024, and still doesn't fund them as standalone measures. Our guide to solar grants and payments in Scotland covers the help that does exist. The 0% VAT relief needs no application.

Feed-in Tariff customers: will a battery affect my payments?

It can, so speak to your FIT supplier before you add one. Ofgem's current guidance on adding storage to Feed-in Tariff installations says the change must be notified to your FIT supplier, including the date the battery was installed and became operational. How the battery is wired and metered decides what happens next. Generation payments can continue where the generation meter still measures only what the panels produce. If your export is metered and the battery can charge from the grid, the export meter may no longer be able to show what came from the panels alone, and metered export payments may stop. Installations of 30 kW or less claiming deemed export may be able to continue on that basis. Ofgem assesses each case once the change is made, and says that where storage has been fitted in a way that affects payments, it may be possible to reverse the change. (Ofgem, co-location of electricity storage under the RO, FIT, REGO and SEG, version 6.2, published 23 May 2025, chapter 3 and scenarios 4.1–4.9.)

How we approach a battery installation

Survey and load check. We look at when you use electricity, your tariff and your roof (if solar is present or planned), and tell you if a battery isn't worth it.
Certified installation. We install and connect the battery and complete the safety checks. Every grid-connected battery has to be registered with the distribution network operator (DNO): under "connect and notify" within 28 days of installation, or under "apply to connect" with approval before installation, depending on the proposed installation and connection. GOV.UK guidance makes the owner responsible for checking this has been done, so ask your installer to confirm it.
Tariff setup. We'll talk you through time-of-use options. Each supplier decides its own eligibility.
Room to expand. Where you plan to add panels, a heat pump or a second battery later, we design the system with that in mind.

0% VAT on home batteries: common questions

Not until 31 March 2027, if the battery is installed in your home. HMRC's VAT Notice 708/6 zero-rates installed batteries from 1 February 2024, whether they are added to existing solar, standalone, or both. From 1 April 2027 these installations are due to carry the reduced rate of 5%. A battery bought without installation is standard-rated at 20%.

On a battery costing £5,000–£8,000 before VAT (published averages from the Energy Saving Trust and Home Energy Scotland, not quotes), 0% VAT saves £1,000–£1,600 against the 20% standard rate. Against the 5% rate due from April 2027, installing before the deadline saves £250–£400.

In our worked examples, longer than its expected life: a £5,000 battery added to existing solar earns about £120–£200 a year after battery losses and lost export, a simple payback of roughly 26–43 years. A standalone battery on Economy 7 saves about £150 a year, around 33 years. Home Energy Scotland says batteries tend to last 10–15 years. A low export rate, high evening use, an EV or a heat pump improve the picture.

Not on savings alone in our worked example. On Octopus's South Scotland Economy 7 rates (6 October 2026), a 5 kWh battery charged off-peak every night saves a typical 2,500 kWh home about £150 a year compared with a single-rate tariff, because the daytime rate rises and some energy is lost in the battery. Cheaper overnight tariffs usually require an EV or solar panels.

Sources and dates

All checked on 6 October 2026. The date in brackets is when the source published or last updated the figure.

HMRC, VAT Notice 708/6 (updated 31 January 2024): sections 2.1, 2.3 and 2.19, zero rate for installed batteries to 31 March 2027, 5% from 1 April 2027, supply-only standard-rated.
Ofgem, Changes to energy price cap between 1 October and 31 December 2026 (26 August 2026): 26.32p/kWh, no VAT on household electricity from 1 October 2026. HMRC, VAT Notice 701/19 (checked 10 November 2026): the 2026 Budget extended that zero rate to 30 June 2027. The Budget left the battery rate unchanged.
Ofgem, typical domestic consumption values (1 July 2026): a typical home uses 2,500 kWh of electricity a year.
Energy Saving Trust, Solar panels (updated 1 October 2026): battery cost £5,000–£8,000.
Home Energy Scotland, Battery storage: cost £8,000, 10–15 year life, may not recoup its cost, lowers export.
Octopus Energy, public tariff data for South Scotland, Direct Debit: Flexible Octopus and Economy 7 rates valid 6 October 2026 and unchanged on 10 November 2026; Flux and flexible Go rates checked 10 November 2026; Flux and Go eligibility; Outgoing Octopus (12p) and the Octopus SEG tariff (4.1p).
EU Joint Research Centre, PVGIS (SARAH3 2005–2023, run 6 October 2026): monthly solar generation near Stirling.
Ofgem, Guidance for generators: co-location of electricity storage and hydrogen production under the RO, FIT, REGO and SEG, version 6.2 (published 23 May 2025): notifying storage, generation and export metering, deemed export, FIT scenarios 4.1–4.9.

The 90% round-trip efficiency, the 1,000 kWh stored a year and the 10% of use already off-peak are our illustrative assumptions, not measured figures.

Find out whether a battery suits your home

We'll look at when you use electricity, your tariff and any solar you have, then tell you what a battery would add, including when the answer is that it wouldn't add enough. Free and no obligation.