The UK government has removed the 20% for retrofitted battery energy storage systems (BESS), effective 1 February 2023.
From the Spring Statement in 2022, energy saving domestic equipment such as heat pumps and roof-mounted solar have been exempt from the VAT. BESS too were exempt, but only when installed alongside other energy-saving materials such as solar.
But this week (11 December) the government announced that retrofitted BESS will now also be exempt from the tax.
Members of the energy industry, including the Association for Renewable Energy & Clean Technology (REA) and Solar Energy UK have been campaigning for retrofitted BESS to also be included in the VAT exemption, something which was not mentioned in the initial Battery Strategy published on 26 November of the preceding Autumn Statement.
However, following a consultation on the expansion of the VAT relief on energy-saving materials – also announced in the 2022 Spring Statement – the government revealed:
“The government agrees with respondents, though, that this technology meets all of the stated objectives for this VAT relief in its own right, and will therefore bring electrical battery storage within the scope of the relief. This means that the technology will now also qualify for VAT relief when either retrofitted to a qualifying energy-saving materials, or installed as a standalone technology connected to the grid.”
Dr Nina Skorupska CBE, chief executive of the REA praised the extensions for “finally” aligning battery storage with other energy saving materials.
“This has been a long-term ask of the REA, and an area of unequal tax treatment that we are happy to see finally be resolved,” said Skorupska.
Skorupska added that to go further, the government ought to extend the VAT exemption to also include thermal storage and electric vehicle (EV) chargepoints.
“Although a long time coming, this is great news for sustainable energy in the UK and I am grateful to everyone on the team who helped make it happen. Installing a battery energy storage system can double the savings offered by a home solar installation, so with energy prices as they are, retrofitting one is a great decision,” said Chris Hewett, chief executive of Solar Energy UK.
This article was originally posted on our sister site Current± and can be found here.