Zero rate of VAT for solar panel products

Hi

Scott Drew,

 

Please refer to following guidance on installation of solar panels and sub-contractors : Energy-saving materials and heating equipment (VAT Notice 708/6) ,   the rules only change if supplied in Northern Ireland . Thank you.

I have been all through 708/6 and unfortunately cannot understand from the guidance, the answer to the specific question regarding would the sub-contractor's invoice to us be zero rated if they are supplying and installing the solar panels and battery as one supply? It seems very clear that we would not charge the end customer vat as it would qualify as zero rated, but we cannot understand clearly if the same applies from the sub-contractor to our company. Could you please clarify? Many thanks

Hello Scott Drew
If the work they are doing qualifies for zero rate it will be what they are working on as opposed to who they are working for.
Thankyou.
Regards.

Greetings. A few questions regarding the VAT exemption of Solar PV and Battery installations. Please can you confirm what I charge 20% and 0% ..... Below is my understanding of a single Solar PV and Battery installation at a residential premises in England 1. Solar panels and subsequent installation material ie fixings = 0% 2. Battery Storage = 0% 3. Labour to install Solar and Battery = 0% 4. Scaffold hire = 20% Is my understanding correct? Many thanks in advance

Hello, If the scaffold is required for you to make your zero rated supply then it will follow the main supply. In order for you to confirm your supply is zero rated please refer to 708/6 section 2 : Energy-saving materials and heating equipment (VAT Notice 708/6)    . Thank you.

 

Hi Could you clear something up. I am a solar panels installer but have customers contacting me who have purchased there own materials. They would obvioulsy pay the 20% vat on the materials they purchased. Do I then charge them 0% vat or 20% vat for labour only as they have purchased there own materials.

Hello, This is quoted in section 2.1 "If you provide only services of installing certain specified energy-saving materials (that is — no materials), your supply, if supplied in Great Britain will be zero-rated, and if supplied in Northern Ireland reduced-rated" of this VAT Notice  : Energy-saving materials and heating equipment (VAT Notice 708/6)   . Thank you.

1) A domestic property needs to have it's electrical supply upgraded to 3-phase to connect solar. Can the 3-phase upgrade to be carried out by external contractors be included in the 0%VAT? 2) If the above property is planning to have ground source heating, which will also require a 3-phase supply, does this mean the 3-phase upgrade can be included in 0%VAT? 3) If the above property will have ground mount solar panels installed 100m away, can the trench required (to be dug by contractor working on behalf of solar company) for the cable between ground mount solar array & inverter in domestic garage be included in the 0%VAT? 4) If existing solar equipment is replaced/upgraded during a new solar installation, can the replacement parts be included in the 0%Vat? 5) Does scaffolding required to access a domestic roof to install solar panels come under the 0%Vat rule? Thanks

Hi.

The 0% VAT in relation to energy saving materials is for the materials and installation of these materials. You can see guidance here:

Energy-saving materials and heating equipment (VAT Notice 708/6)

Where the installation of energy saving materials involves anciallary supplies please see section 2.7.2 of the following guidance:

Installations of energy-saving materials

If existing solar panels are upgraded then this can be installed at the 0% rate of VAT as long as the criteria is met in the above link.

The 0% VAT would relate to the materials and to the installation of these materials but would not include services like scaffolfing which are not of themselves energy saving materials or installation services.

We would recommend looking at the guidance carefully and if you feel that the guidance does not fully answer your questions then you would need to put your queries to our Written enquiries Team.

VAT: general enquiries

Thank you.

If we are installing solar PV and Batteries on a residential property but the client wants us to invoice his limited company is it still 0% VAT as being installed on a residential building?

Hi,

As long as the installation work is carried out to a dwelling then the work would still be 0% VAT as long as the criteria in VAT Notice 708/6 are met.

Energy-saving materials and heating equipment (VAT Notice 708/6)

Thank you.

Dear HMRC, I am having solar panels and batteries installed at home. Because of the current electrical supply within my home, I am having to fit a second electrical consumer unit dedicated to the supply of the panels. However, my approved contractor cannot do this work and it is being subcontracted to an electrician who wants to charge 20% VAT. I stress again that this additional consumer unit is only for the panels and not for any other aspect of my home supply. Can I ask the electrician to apply zero rating to his bill? Thank you.

Simple question: If I'm supplying and fitting energy saving materials to a residential property owner at 0% and purchasing the energy saving materials from distributors at 20% rate, do I claim back the 20% rate on the supply to me on a vat return?

Hi Peter Morris
If another electrician is fitting the second electrical consumer unit then this in itself is not an enery saving material and so the electrician would need to charge 20% for this supply.
Thankyou.

Hi Martinthefizzio,

Yes, as long as the general rules for reclaiming input tax are met you can reclaim this on your VAT return as normal.

Please see the following guidance for the rules.

10. Introduction to input tax

Thank you.

It does seem to be a contradiction in interpretation of the guidelines. On one hand, the government is saying that solar panels installations in residential properties are temporarily zero-rated for VAT from 1st April 2022 up to and including 31st March 2027. However, on the other hand, if the installer is not VAT registered, they will have to pay the 20% VAT when they buy the equipment and will not be able to recover it. As a result, they may have to pass on that cost to their clients, thereby charging VAT on the panels even though the installation itself is zero-rated. This dilemma creates a potential barrier for small contractors to fit solar panels and make them more affordable for consumers, as they cannot pass on the VAT that they are unable to recover. Therefore, it may be helpful for the government to clarify and simplify the guidelines to avoid any misinterpretations and ensure that small contractors can benefit from the temporary zero-rating of VAT on solar panel installations.

It does seem to be a contradiction in interpretation of the guidelines. On one hand, the government is saying that solar panels installations in residential properties are temporarily zero-rated for VAT from 1st April 2022 up to and including 31st March 2027. However, on the other hand, if the installer is not VAT registered, they will have to pay the 20% VAT when they buy the equipment and will not be able to recover it. As a result, they may have to pass on that cost to their clients, thereby charging VAT on the panels even though the installation itself is zero-rated. This dilemma creates a potential barrier for small contractors to fit solar panels and make them more affordable for consumers, as they cannot pass on the VAT that they are unable to recover. Therefore, it may be helpful for the government to clarify and simplify the guidelines to avoid any misinterpretations and ensure that small contractors can benefit from the temporary zero-rating of VAT on solar panel installations.

Seeking clarification on 0% vat for scaffold. Contractor is supplying and installing solar panels on residential property. Scaffold is needed to access the roof. The scaffold will not be used for any other work. Does the quote to the customer (which includes the cost of the scaffold) get charged fully at 0% VAT or does the scaffold need to be invoiced separately with 20% VAT added?

I've tried asking about this in a separate thread, but had no response from HMRC. Are solar power diverters, which use current sensing technology on the solar supply cable and are able to divert surplus solar power into hot water and heating systems, eligible for the zero rating of VAT under the ESM definition of 'hot water controls'? Logically, it seems as if they should, since they can reduce grid supply to 'charge' the hot water or heating system to zero and use 100% renewable self-generation. Thanks

Hi ElectricianInOxforshire,

The 0% VAT rate only applies to the installation of energy saving materials and would not apply to the scaffolding as these are not in themselves energy saving materials and so the scaffold service would need to be invoiced at 20%.

You can see the guidance here:

Installations of energy-saving materials

Thank you.