Government update: Battery storage now 0% rated VAT

The Government announced in December, that from February 1st 2024, there would be zero VAT to pay on stand alone battery storage systems.

Previous to this, battery storage was only exempt from VAT if installed as part of a solar panel system. This move comes as positive news for anyone wishing to add batteries to their existing solar system or those who wish to install standalone batteries to their home. The price of having batteries has just been cut by 20%.

Comments from the Government:

The government recognises the integral role that electrical battery storage can play in reducing households’ reliance on the grid, both when retrofitted to a qualifying ESM (energy saving material) and when used as a standalone technology connected to the grid.

This technology already qualifies for VAT relief when installed alongside a qualifying ESM, as it is ancillary to a zero-rated supply. The government agrees with respondents, though, that this technology meets all of the stated objectives for this VAT relief in its own right, and will therefore bring electrical battery storage within the scope of the relief. This means that the technology will now also qualify for VAT relief when either retrofitted to a qualifying ESM, or installed as a standalone technology connected to the grid.

The government hopes this reform will enable more consumers to retrofit electrical battery storage to existing ESMs, allowing households to maximise the efficiency of their solar panels, wind turbines, and water turbines.

If adding battery storage is something that you have thought about, it can be a great way to store any excess solar power for use at night. Many people use them to help charge their electric vehicles, or to run appliances overnight if their day time use is already high. Many battery manufacturers allow batteries to be stacked to allow for extra capacity as well. If your solar monitoring information shows that you are exporting energy back to the grid, then battery storage could be something for you to look at.

Adding battery storage will start saving you money from the day it’s installed, whether you charge it with excess solar, or on a cheap energy tariff. And now, thanks to the Government’s announcement, you can save 20% VAT on them.

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