Electrical storage batteries became included in the VAT treatment of energy-saving materials with effect from 1 February 2024, according to HMRC's internal manual for the VAT energy-saving materials and grant-funded heating supplies rules1. The change applies to batteries installed in residential accommodation or in buildings intended for use solely for a relevant charitable purpose, and only in the circumstances set out in the guidance1.
The manual defines the batteries in scope as those that store energy in the form of chemical energy which is then converted back to electrical energy when the battery is discharged1. Batteries that store energy in the form of heat, described as thermal or heat batteries, are not included1.
Three circumstances are listed. The first is the retrofitting of a battery for storing electricity generated by one or more qualifying energy-saving materials, namely solar panels, wind turbines and water turbines1. The second is the installation of a standalone battery for storing electricity from the grid, meaning the mains electricity1. The third is the installation of a battery for storing electricity both from one or more qualifying energy-saving materials and from the grid1.
| Circumstance | Description |
|---|---|
| Retrofitted battery | Stores electricity generated by qualifying energy-saving materials (solar panels, wind turbines, water turbines)1 |
| Standalone battery | Stores electricity from the grid (mains electricity)1 |
| Combined battery | Stores electricity from qualifying energy-saving materials and from the grid1 |
On the rate, the manual states that electrical batteries installed as part of the installation of a qualifying energy-saving material normally fall to be ancillary and therefore form part of a single supply, which is currently subject to the temporary zero rate up to 31 March 2027 and will be reduced rated thereafter1.
"With effect from 1 February 2024, electrical storage batteries are included (in the circumstances set out below)."
Why it matters for households
VAT treatment feeds directly into what a household pays for a battery installation, and the manual ties the rate to how the battery is supplied. Where a battery is installed alongside a qualifying energy-saving material such as solar panels, it normally forms part of a single supply, which the manual says is currently subject to the temporary zero rate up to 31 March 2027 and reduced rated thereafter1. A standalone battery charged from the grid falls within the listed circumstances but is not described in the same ancillary terms, so the rate that applies to it is not set out in this page.
The scope also matters for what counts as an eligible installation in the first place. Heat batteries are excluded, so a household considering storage of heat rather than electricity is outside these circumstances1. The rules apply to residential accommodation and to buildings used solely for a relevant charitable purpose1.
For a home's energy independence, the inclusion of batteries that store electricity generated by solar panels, wind turbines or water turbines, and of batteries that combine that generation with grid charging, places storage within the same VAT framework as the generating equipment itself1. The grants and schemes hub sets out the wider support landscape for household energy measures.
What happens next
The manual gives one dated step: the temporary zero rate runs up to 31 March 2027, after which the supply will be reduced rated1. No further dates are given on this page.