VAT on solar panels for charities

VAT on solar panels for charities is 0% when the panels are installed in a building used solely for a relevant charitable purpose, for work in the period from 1 February 2024 to 31 March 2027. From 1 April 2027 the same installations are due to move to the reduced rate of 5%. This page sets out the dates, who qualifies, what is covered and what to ask your installer. It is general guidance based on HMRC VAT Notice 708/6, last checked on 15 October 2026, and it is not tax advice.

The dates that matter

Who qualifies

The relief turns on how the building is used. HMRC defines a relevant charitable purpose as use by a charity either otherwise than in the course or furtherance of a business, or as a village hall or similar, providing social or recreational facilities for a local community (section 2.22). A village hall, a community centre, a scout hut or a place of worship run by a charity for its charitable aims will usually fit. If a building also has business use, such as a trading charity shop or commercial lettings, check the position with HMRC or a VAT adviser before you rely on the zero rate. Our guides to village halls and charity shops show where the line often falls.

What is covered

• Solar panels are on HMRC's list of qualifying energy-saving materials when they are installed (sections 2.7 and 2.11).
• The relief is for installation. If materials are supplied without being installed, the supply is standard-rated (section 2.3), so a materials-only purchase does not get the zero rate.

What the rate is worth: worked arithmetic

The table assumes a system priced at £20,000 before VAT. It is arithmetic on an assumed price, not a quote.

So the zero rate removes the 20% VAT charge that a non-qualifying buyer would pay on top of the price. If the work slips past the end date, the reduced rate would add £1,000 on this example. That is one reason to ask for a firm installation date.

What to ask before you sign

1. Ask the installer to confirm in writing the VAT rate on your quote and the building use it relies on. HMRC expects the supplier to take reasonable steps to confirm the building will be used for a relevant charitable purpose and to keep documentation, for example a letter from the customer confirming the intended use (section 2.22).
2. Ask how the installation date, and any staged payments, affect the rate given the 31 March 2027 end date.
3. Check that the contract is for installation, not materials only.

Grants work separately from VAT, and most charities combine the two. See grants and funding for charities for the routes, and what solar costs for a charity for typical system sizes and payback.

Questions

Do charities pay VAT on solar panels?

In many cases, no. From 1 February 2024 to 31 March 2027 the installation of solar panels in a building used solely for a relevant charitable purpose is zero-rated, so the VAT rate is 0%. From 1 April 2027 the reduced rate of 5% is due to apply. Whether a particular building qualifies depends on how it is used, so confirm it in writing with the installer.

Does a village hall qualify for 0% VAT on solar panels?

HMRC's definition of a relevant charitable purpose includes use by a charity as a village hall or similar, providing social or recreational facilities for a local community. A hall run by a charity on that basis is a good candidate, but confirm with your installer and, if there is any business use, with a VAT adviser.

What happens to the VAT rate after 31 March 2027?

HMRC's notice says the zero rate reverts to the reduced rate of 5% from 1 April 2027. On a system with a £20,000 price before VAT that is £1,000 of VAT instead of none. Ask your installer how the date of installation affects the rate on your contract.

Sources

• HMRC, VAT on energy-saving materials and heating equipment (VAT Notice 708/6), sections 2.1, 2.3, 2.7, 2.11 and 2.22.