Vat Rate Solar Panel Installation

Huge vat rise on solar panels makes installation entirely uneconomic say experts.

Vat rate solar panel installation. Vat is charged at the reduced rate of 5 on the installation of solar panels in or in the curtilage of residential accommodation. The government has introduced secondary legislation to amend the scope of the 5 rate to comply with european vat rules si 2019 958. Consequently solar panels water turbines and wind turbines along with battery storage systems will no longer qualify for the reduced rate of vat. The installation of certain energy saving materials into any residential accommodation is subject to the reduced vat rate of 5.

Value added tax consolidation act 2010 vatca 2010 ref. Changes to the vat treatment of solar panels and other energy saving materials are not as extensive as first feared. Take note of the two underlined parts as both are applicable in order to qualify for the reduced rate of vat. In such cases where the cost of the physical solar panels total more than 60 of the total installation value the 5 rate applies only to the labour cost of installing the goods with the remainder charged at the standard vat rate of 20.

For example a business carries out an installation of solar panels combined with a battery. If however the labour costs of installing energy saving material are greater than the cost of the material itself the labour costs will qualify for a 5 vat rate. To qualify you must be over 60 or getting one or more of. At present vat is charged at the reduced 5 rate on the installation of energy saving materials esms including solar panels in residential accommodation.

With effect from 1 october 2019 if this draft legislation is implemented this will be more. If you do a diy install you will need to pay the full vat rate when you buy your panels. The installer should charge you the lower vat rate on their materials the solar panels and their installation costs. Installation repair and maintenance of renewable source heating systems the reduced rate is only for the grant funded part of the work.

Labour costs will still benefit from the reduced rate of 5 per cent vat.