Solar panel grants, 0% VAT and the Smart Export Guarantee, explained
Is there a grant for solar panels?
Not in the way there is for heat pumps. The Boiler Upgrade Scheme pays £7,500 towards an air source heat pump, and it does not cover solar panels (per gov.uk). We would rather tell you that plainly than let you book a survey expecting a cheque that isn’t there.
What does exist for solar is a mix of a tax break, an income scheme and, for some households, targeted funding. Those three are the 0% VAT rate, the Smart Export Guarantee, and the ECO4 or Warm Homes routes. We will take them one at a time.
What is 0% VAT on solar and batteries?
Residential solar panel and battery installs currently carry 0% VAT in England, Scotland and Wales. It applies automatically when an MCS-certified installer supplies and fits the system as a single job, so there is no form to fill in and no claim to make. Your quote simply has no VAT added (HMRC VAT Notice 708/6).
It covers the panels, the inverter, the mounting, the cabling, the labour and battery storage. Since February 2024 it also covers a standalone battery fitted on its own, without panels. The rate is set to run until 31 March 2027, then revert to 5% on 1 April 2027 (HMRC VAT Notice 708/6). On a typical install that window is worth a real amount off the up-front cost, and it has a fixed end date.
One thing to know: the relief is for the supply-and-install package. Buying panels from one company and having a different firm fit them can lose the 0% rate, which is one reason most homeowners use a single MCS-certified installer.
How does the Smart Export Guarantee work?
The Smart Export Guarantee, or SEG, is the scheme that pays you for the electricity your panels generate but you don’t use. It is run under Ofgem rules, and any electricity supplier with more than 150,000 customers has to offer at least one export tariff (per Ofgem). Your surplus is exported to the grid automatically and your supplier pays you per unit.
Two points matter here. First, suppliers set their own rates, so they vary a lot. Through 2026 the better fixed rates have sat around 12 to 15p per unit, with some going higher, while poor tariffs pay only a few pence. Second, your export supplier does not have to be your electricity supplier. You can import from one and export to another, so it pays to compare once your system is in.
To qualify you need an MCS certificate for the install and a smart meter that records half-hourly export (per Ofgem). We handle the MCS side. If you don’t have a suitable smart meter, your supplier usually fits one free.
A battery changes how much you export, because it stores your surplus for later instead of sending it to the grid. We go through that trade-off in solar panels with or without a battery: do you actually need one?.
What about ECO4 and the Warm Homes route?
Some lower-income or benefit-eligible households, or homes with a poor EPC rating, may qualify for solar funded through ECO4 or a council-administered Warm Homes route. Under ECO4, solar is usually offered alongside other measures such as insulation or a heating upgrade, rather than on its own.
Eligibility is assessed by your local authority or a participating energy supplier, not by us. ECO4 is due to close to new applications on 31 December 2026, after which support shifts to the government’s Warm Homes Plan, with the council-run Warm Homes Local Grant continuing beyond that (per gov.uk and Ofgem). If you think you might qualify, check directly rather than assuming, though this isn’t the route most homeowners will use.
What this means for your quote
Put simply: the 0% VAT is already in your price, the SEG is income you set up after install, and the ECO4 or Warm Homes routes only apply to eligible households.
When we quote you, the VAT is already handled, so there is nothing to apply for on that front. We talk through the SEG tariffs relevant to your supplier at survey, so you know what your exports will earn. And if your circumstances suggest ECO4 or Warm Homes might be worth a separate check with your council, we will flag it.
The honest summary, and your next step
George puts it straight: “One thing we won’t do is pretend there’s a heat-pump-style grant sitting there for solar, because there isn’t right now. What there is: 0% VAT, the Smart Export Guarantee, and energy prices moving in a direction that makes generating your own electricity look more sensible every quarter.”
If you want the wider question of whether it all adds up for your home, read are solar panels worth it in the North East in 2026? or head back to the solar knowledge hub. When you are ready, book a survey and we will run your figures with the 0% VAT and the right SEG tariff built in.