0% VAT on Energy-Saving Materials Ends March 2027: What You Need to Know

What the 0% VAT Relief Covers

The zero-rate VAT treatment applies to the supply and installation of qualifying energy-saving materials in residential properties. The following products and systems are eligible:

• Heat pumps: Air source heat pumps (ASHPs) and ground source heat pumps (GSHPs)
• Solar photovoltaic (PV): Solar panels and associated inverters
• Battery storage: Home battery systems paired with solar or standalone
• Solar thermal: Solar hot water collectors
• Insulation: Cavity wall, loft, solid wall, floor and roof insulation
• Heating controls: Smart thermostats, zone controls, programmable timers
• Draught-proofing: Doors, windows and other openings
• Double and triple glazing: Where installed as part of an energy efficiency measure

The installation labour must be supplied together with the materials for the zero rate to apply. Standalone materials purchased without installation may attract the standard rate.

When It Ends: 31 March 2027

The 0% VAT rate is a temporary measure introduced by HMRC. It is scheduled to end on 31 March 2027, at which point the rate reverts to 5% (the reduced rate for energy-saving materials).

This is a firm legislative deadline. There is currently no indication from HM Treasury of an extension. Homeowners planning energy upgrades should treat 31 March 2027 as the definitive cut-off.

How Much You Save: Worked Examples

Here's what the difference between 0% and 5% VAT looks like in practice:

• Air source heat pump (£11,000 installation): At 0% VAT you pay £0 in VAT. At 5% you'd pay £550. Saving: ~£550
• Solar PV + battery (£10,000 installation): At 0% VAT you pay £0. At 5% you'd pay £500. Saving: ~£500
• Ground source heat pump (£20,000 installation): At 0% VAT you pay £0. At 5% you'd pay £1,000. Saving: ~£1,000
• Loft + cavity wall insulation (£3,000): At 0% VAT you pay £0. At 5% you'd pay £150. Saving: ~£150
• Combined heat pump + solar + battery (£22,000): At 0% VAT you pay £0. At 5% you'd pay £1,100. Saving: ~£1,100

These savings are in addition to any grants or loans available. They represent pure tax savings that disappear after the deadline.

BUS £9,000 Off-Gas Uplift Also Ends 31 March 2027

The enhanced Boiler Upgrade Scheme grant for off-gas homes is time-limited to the same deadline:

• Before 31 March 2027: Off-gas homes (oil or LPG) receive £9,000
• From 1 April 2027: All homes receive the standard £7,500 regardless of fuel type

For off-gas homeowners, this means losing £1,500 in grant value after the deadline. Combined with the VAT change, the total additional cost of waiting could be £2,000–£2,600 on a typical heat pump installation.

Read our full grants and funding guide for details on all available schemes.

Combined Saving: Maximum Benefit Window

The period between now and 31 March 2027 allows you to stack multiple incentives on a single project:

• Boiler Upgrade Scheme: £7,500 (or £9,000 off-gas) deducted from your invoice
• 0% VAT: Zero tax on the full installation cost
• Warm Homes Loan: No-/low-interest financing for the balance

Worked example — off-gas ASHP installation:

• Gross installation cost: £12,000
• BUS off-gas grant: −£9,000
• VAT at 0%: £0
• Net cost to you: £3,000
• Funded via Warm Homes Loan at ~£37/month over ten years

Same installation after April 2027:

• Gross installation cost: £12,000
• BUS standard grant: −£7,500
• VAT at 5% on £4,500: +£225
• Net cost to you: £4,725
• Difference: £1,725 more expensive

What Happens After April 2027

The incentive landscape changes but doesn't disappear:

• VAT: Rises from 0% to 5% — still a reduced rate, but no longer zero
• BUS grant: Remains at £7,500 for all homes (no off-gas uplift)
• Consumer Loan Scheme: A new government-backed consumer loan product launches in April 2027, designed to partially replace the introductory Warm Homes Loan rates. Details are still emerging.
• Warm Homes Loan: Expected to continue but potentially at higher interest rates than the introductory period

Heat pumps and energy upgrades remain financially attractive after April 2027 — the total incentive package is simply reduced by several hundred to over a thousand pounds depending on your circumstances.

Timeline: When to Book, Install and Complete

To guarantee your installation qualifies for both 0% VAT and the £9,000 off-gas BUS uplift, plan backwards from the deadline:

• November–December 2026: Book your free survey and receive your quotation. MCS-certified partners' diaries fill quickly ahead of the deadline — early booking secures your slot.
• January–February 2027: Design finalised, BUS voucher applied for, materials ordered. Allow 4–8 weeks from survey to installation start depending on installer availability.
• February–March 2027: Installation and commissioning completed. Typical ASHP installation takes 1–2 weeks; GSHP may take 2–4 weeks.
• By 31 March 2027: Installation complete, VAT invoice issued at 0%, BUS grant redeemed. The installation must be completed and invoiced before the deadline — not merely started.

We recommend booking your survey by December 2026 at the latest to allow sufficient time for design, procurement and installation before the deadline.

Planning Ahead Without Pressure

Deadlines create urgency, but good decisions shouldn't be rushed. Here's how to approach this sensibly:

• Get a survey now: Understanding your options costs nothing. A professional heat loss assessment tells you whether a heat pump is suitable and what the true cost will be.
• Compare properly: Obtain at least three itemised quotations. Check MCS certification, BUS eligibility and VAT treatment on each.
• Don't sacrifice quality for speed: A poorly installed heat pump will cost more in running costs and repairs than the VAT saving is worth. Choose competence over haste.
• If you miss the deadline: The 5% rate is still reduced, the BUS grant continues at £7,500 and the Consumer Loan Scheme provides alternative financing. The economics still work — just slightly less favourably.