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UK cancels battery storage VAT policy

2023-12-29

Latest company news about UK cancels battery storage VAT policy

The British government shockedly announced that in order to further improve energy efficiency, it will cancel the 20% value-added tax on the installation of battery energy storage systems (BESS) from February 1, 2024.

 

This decision not only goes beyond the previous policy which was limited to batteries installed at the same time as solar panels, but also includes independent battery systems and later retrofitted battery systems, injecting new impetus into the UK's clean energy transition.

 

In the past, VAT relief was only available for battery storage systems installed at the same time as energy-saving materials (ESM) such as solar panels. Now, the introduction of new policies allows more households to upgrade their existing ESMs to battery storage systems, helping the British energy industry enter a new era.

 

Summary of policy points:

 

UK government expands tax breaks for late-stage battery storage installations in homes

 

From February 1, 2024, the UK government has eliminated the 20% value-added tax (VAT) on late-installed battery energy storage systems (BESS).

 

The decision goes beyond previous policy, where relief was limited to batteries installed at the same time as solar panels.

 

This latest decision gives homeowners looking to upgrade home energy storage the same tax benefits as installing energy-efficient materials such as heat pumps and rooftop solar.

 

Background and changes

 

Initially, from the Spring 2022 Statement, domestic equipment (such as heat pumps and rooftop solar) benefit from a 20% VAT reduction. While battery energy storage systems are included in this exemption, they are limited to installations with other energy-saving materials.

 

In recent announcements, the government has expanded the scope of VAT relief to include stand-alone battery installations and later-installed battery energy storage systems, no longer restricted to other energy-saving materials. This change enables more property owners to take advantage of the financial incentives for adopting battery energy storage systems.

 

The expanded VAT exemption further lowers the financial threshold for adopting battery energy storage systems, making it more accessible and affordable for property owners.

 

Industry associations have also called on the government to further expand the scope of tax breaks to include thermal energy storage and electric vehicle charging facilities.

 

With the introduction of policies, Britain's clean energy carnival moment is coming, laying a solid foundation for a greener and more sustainable future.

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