The 0% VAT Deadline for Solar Installers
Written and reviewed by the Solar Installer Accountants editorial team. Last reviewed 22 August 2026.
The zero rate on energy-saving materials runs from 1 May 2023 to 31 March 2027. On 1 April 2027 it becomes the reduced rate of 5%, unless the government extends it. That is not a distant problem: a quote written today for a job completed in spring 2027 already straddles the change.
This is what the change does to an installer's pricing, pipeline and VAT position, and the decisions worth making before it arrives rather than during it.
What Actually Changes
One number, with a lot behind it. Domestic supply-and-install work moves from 0% to 5%. The relief itself does not disappear, and the buildings it covers do not change, so everything in VAT Notice 708/6 about residential accommodation and charitable buildings continues to apply. It is the rate that moves.
For a customer paying £8,000 for an installation, 5% is £400 they were not paying before. That is small enough that it will not stop most jobs and large enough that it will show up in every quote conversation from late 2026 onwards.
The Quoting Problem Starts Now
The rate that applies is fixed by the tax point, not by the date you wrote the quote. A fixed-price quote issued in 2026 for work completed after 31 March 2027 leaves the 5% to come out of your margin unless the quote says otherwise.
The practical fix is a line in your quotation terms stating that the price assumes the VAT treatment in force at the date of supply, and that a change in rate is passed on. That is ordinary commercial drafting rather than anything clever, and it needs to be in the template before the pipeline stretches past March 2027, which for a firm quoting large systems is already the case.
Deposits are the other place this bites. Taking a deposit creates a tax point for that amount, so a deposit received before the change and work completed after it can leave a single job with two rates on it. That is manageable if you know it is coming and messy if you meet it when the return is being prepared.
It Pulls You Into the Reverse Charge
This is the consequence installers miss. The VAT domestic reverse charge applies to standard and reduced rate supplies reported under the Construction Industry Scheme. It does not reach a zero-rated supply. That is why an installer doing domestic subcontract work has been outside it entirely.
From 1 April 2027 domestic installs are reduced rated, not zero rated. Subcontract work that has never been in scope comes into it, and if you invoice a main contractor rather than a homeowner, the reverse charge starts applying to invoices that were straightforward the month before. Whether it catches you depends on your mix, and it is worth working out which side of it you are on well ahead of the date.
What to Do Before March 2027
Three things, in order. Get the rate-change wording into your quotation template now, because it costs nothing and protects every long-dated job. Work out what proportion of your pipeline completes after the change, because that tells you how exposed you actually are. Then check whether the move to 5% puts you into the reverse charge on any of your subcontract work.
There is a customer-facing side too. Payback on a domestic system is driven by what the customer saves and what they earn exporting, and the export side runs through the Smart Export Guarantee that Ofgem administers. A 5% rise in the installed price lengthens payback slightly, and installers who can talk about that accurately will hold conversion better than ones caught out by it.
The rate is set by government and could be extended or changed again. Pricing on the law as it stands, with terms that let you pass on a change, is the position that works either way.