VAT on domestic solar installations – what you need to know

VAT on domestic solar installations – what you need to know

There’s a lot in the media at the moment about the VAT on solar panels increasing from 5% to 20% from 1 October 2019. Much of this is lazy journalistic scaremongering and most installations will not be affected. Here are some simple facts:

  • VAT will still be charged at 5% on all domestic solar PV system installations where the labour charges make up 40% or more of the total cost. This is the case for the majority of installations.
  • VAT on some solar installations which include a battery will still be charged at 5% if the above qualification is satisfied. Larger batteries may require the job to be split into two invoices, one at 5% VAT for the PV and one at 20% VAT for the battery.
  • VAT isn’t and has NEVER been 5% for non-domestic installations.
  • VAT on repairs to solar installations has always been 20%.
  • VAT on retrofit battery installations has always been 20%.

RED Electrical will always charge the correct rate of VAT on our installations. Installers that haven’t complied with the above HMRC requirements risk having to pay the difference in VAT paid and potentially financial penalties. If you find an installer that is charging VAT at the wrong rate then consider what will happen to that installer in the event of a VAT audit. Many would be forced out of business.

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