The UK government has exempted retrofitted battery energy storage systems (BESS) from its 20% VAT, from 1 February 2024.

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 yesterday (11 December) the government announced that retrofitted BESS will now also be exempt from the tax.

Best Solar Batteries: GivEnergy AC3 battery inverter on the right, with 9.5kWh battery on the left (Image: Tanjent)

GivEnergy AC3 battery inverter on the right, with 9.5kWh battery on the left (Image: Tanjent)

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.

Read more: Current+