Thinking about going solar but not sure where to start – or whether it’s worth it? The good news is, if you’re a homeowner or running a business in the UK, there’s a whole host of solar grants and incentives that can make solar power more affordable than ever.
From VAT breaks and government-backed grants to payments for the energy you export, there’s real support out there to help you reduce your upfront costs and make long-term savings on your bills. Whether you’re upgrading your family home or planning a commercial solar project, this guide breaks down the key funding schemes, tax incentives and smart savings you should know about – and how to make the most of them.
With 0% VAT on solar panels running until March 2027 and targeted funding schemes like the Warm Homes Plan (Scotland) and ECO4 still available in many parts of the UK, there’s never been a better time to make the switch to solar.
1. 0% VAT on solar panels (until March 2027)
As part of a government initiative to promote energy efficiency and lower carbon emissions, solar panels, battery storage and heat pumps now qualify for 0% VAT in most domestic installations.
This applies to:
- Solar PV panels
- Solar thermal panels
- Battery storage (including retrofit)
- Installation costs
Introduced in 2022 and extended until 31 March 2027, this VAT relief could save homeowners hundreds of pounds on a typical solar installation.
Source: GOV.UK – VAT Notice 708/6
2. Smart Export Guarantee (SEG)
If your solar system generates more energy than you use, you can sell the surplus back to the grid through the Smart Export Guarantee (SEG). Launched in 2020, SEG replaced the old Feed-in Tariffs (FIT), allowing homeowners and businesses to earn payments based on the amount of electricity they export.
You must have a system installed by a certified MCS installer (like SWH) and a smart meter capable of taking half-hourly readings.
SEG tariffs vary between energy providers, so it pays to shop around. Octopus Energy, E.ON Next and British Gas are among those offering some of the most competitive rates.
Source: Ofgem – Smart Export Guarantee
3. Energy Company Obligation (ECO4) Scheme
The ECO4 scheme is designed to help low-income and vulnerable households improve energy efficiency through grants for insulation, heating systems and renewable technologies like solar PV.
Eligibility depends on household income, benefits received and energy performance rating. ECO4 runs until March 2026 and is administered via energy suppliers.
While it doesn’t apply to every home, it’s worth checking to see if you (or your tenants) qualify.
Source: Ofgem – ECO4 Guidance
4. Warm Homes Plan (Scotland Only)
If you’re in Scotland, the Warm Homes Plan is a government initiative that offers grants and interest-free loans to help improve the energy efficiency of your home. This includes solar panels, battery storage and other upgrades.
You may be eligible for a grant of up to £10,000 (or more in some cases) through the Home Energy Scotland scheme, particularly if you’re in fuel poverty or receiving certain benefits.
Source: Home Energy Scotland – Funding
5. Business Benefits & Capital Allowances
For commercial solar installations, businesses may be able to claim tax relief through the Annual Investment Allowance (AIA). This allows 100% of the cost of qualifying solar equipment to be deducted from pre-tax profits, up to a threshold of £1 million.
Solar panels can also improve your building’s EPC rating, reduce long-term operating costs and enhance your ESG credentials – all great for your bottom line and your brand.
Source: HMRC – Capital Allowances
Need help navigating solar funding?
Solar grants and incentives can be a bit of a headache – but we’re here to help. At SWH, we provide clear advice, honest pricing and expert installation for homeowners, landlords and businesses looking to switch to solar.
We’re also a member of Octopus Energy’s Trusted Partner Network, which means our customers can benefit from exclusive energy credits and support when they choose an Octopus tariff.
Get in touch today to request a free, no-obligation quotation and discuss the funding options available to you.
