Effective Feb. 1, the UK government has exempted retrofitted battery energy storage systems (BESS) from the 20% value added tax (VAT).

Residential BESS are now exempt from VAT in the United Kingdom when installed either new or retroactively in conjunction with rooftop solar systems.

Previously, VAT relief was only available for domestic BESS if installed together with a new solar energy system. As of Feb. 1, a VAT zero rate will also apply to retrofitted residential BESS.

The VAT relief also applies to BESS when installed in charitable buildings.

How big a home battery do I need? (Image: Tanjent/DALL-E)

How big a home battery do I need? (Image: Tanjent/DALL-E)

Extending zero-rating VAT relief to cover retrofitted BESS follows significant solar industry campaigning. In response, the UK government announced in December that it would expand its VAT relief for energy-saving materials (ESMs) to include all domestic BESS.

Water-sourced heat pumps and smart diverters were also zero rated as part of the change.

“The cut in VAT is exceedingly welcome and we have every expectation that it will increase demand for home battery energy storage,” said Chris Hewett, chief executive of trade association Solar Energy UK. “By allowing solar power to be used after dark, it can double the savings offered by home solar power systems. There has never been a better time to upgrade than today.”

Read more: pv-magazine