UK Government set to finally drop VAT from home energy storage

The government has announced that VAT relief on Energy Saving Materials (ESMs) in residential buildings will be extended to include home batteries, power diverters and water-source heat pumps from February 1, 2024. 

The decision to extend the VAT relief will make it easier and more cost-effective for UK households to invest in next-generation solutions to improve energy efficiency and reduce energy bills.

Under the current scheme, 20% VAT is payable on energy storage unless it was being installed alongside other energy-saving materials that were already exempt, such as roof-mounted solar. However, this change means that those with existing solar can now retrofit an energy storage system without having to pay the 20% VAT. 

Jordan Brompton, Co-Founder and CMO of myenergi, commented, "Bringing an increasing number of tech innovations into the scope of VAT relief on ESMs is a major step forward. As well as opening up widespread financial and environmental benefits, it demonstrates the government's commitment to ensuring that support remains firmly in-line with the rapidly evolving ESM landscape."

Brompton also noted that the government's decision to exclude eco-smart EV charge points from the scope of VAT relief is disappointing. "While a significant step forward, it's disappointing to hear that eco-smart EV charge points will continue to remain outside the scope come February 2024.

“We will continue to push for change when it comes to this precise point – after all, we believe that all decarbonisation solutions should be incentivised. It seems shortsighted at best to exclude certain products from VAT relief that are already having a huge impact reducing consumers' energy costs and reducing our reliance on energy from the grid."