UK Solar Panel Grants & Incentives: 2026 Guide
The UK offers substantial financial incentives for solar PV installations. Residential systems benefit from 0% VAT (saving up to £1,000+), the Smart Export Guarantee (SEG) pays 3–30p/kWh for exported electricity, and the Warm Homes Plan (replacing ECO4 from March 2026) provides grants and interest-free loans for eligible households. Solar panels in the UK pay for themselves in 6–9 years.
Quick Answer
UK solar incentives in 2026 include 0% VAT on residential installations (saving £1,000+), Smart Export Guarantee payments of 3–30p/kWh for surplus electricity, the Warm Homes Plan (replacing ECO4) with grants and interest-free loans for eligible households, HUG2 grants for off-gas homes, the Boiler Upgrade Scheme (£7,500 for heat pumps), and a £150/year energy bill reduction from the government covering 75% of the Renewables Obligation levy. A typical 4 kWp system costs £5,000–£7,000 after the VAT saving.
Last updated May 2026
Fact-checked by John Rooney, Solar Energy Editor. Editorial policy
0% VAT confirmed until March 2027. Last updated May 2026.
What incentives are available for solar panels in the UK in 2026?
The UK government offers several financial incentives for solar PV in 2026. Residential installations benefit from 0% VAT (since April 2022, confirmed until March 2027), saving homeowners around £1,000+ on a typical system. The Smart Export Guarantee (SEG) requires licensed energy suppliers to offer a tariff for exported electricity, currently 3–30p/kWh. Low-income households may qualify for funded solar through the Warm Homes Plan (which replaced ECO4 in March 2026) or HUG2. Businesses benefit from the Annual Investment Allowance for 100% first-year tax relief.
What financial supports are available for solar energy in the UK?
0% VAT on Solar
Smart Export Guarantee
Warm Homes Plan
HUG2 (Home Upgrade Grant)
Great British Insulation Scheme
Boiler Upgrade Scheme (BUS)
Annual Investment Allowance
Reduced Energy Bills
£150 Off Energy Bills
Is there VAT on solar panel installation in the UK?
Since 1 April 2022, residential solar panel installations in the UK are zero-rated for VAT (0%). This was introduced in the Energy Security Bill and is confirmed until at least March 2027. The saving is approximately £1,000–£1,400 on a typical system compared to the standard 20% VAT rate.
What's covered at 0% VAT
- ✓ Supply and installation of solar panels on residential properties
- ✓ Inverters, wiring, mounting, and controllers
- ✓ Battery storage when installed alongside solar panels
- ✓ Heat pumps, insulation, and other energy-saving materials
Important conditions
- ✗ Commercial installations: standard 20% VAT applies
- ✗ Buying panels separately without installation: 20% VAT applies
- ✓ Must be installed on or adjacent to a residential dwelling
- ✓ Applies in England, Scotland, Wales, and Northern Ireland
How does the Smart Export Guarantee (SEG) work in the UK?
Under the UK's Smart Export Guarantee (SEG), licensed electricity suppliers with 150,000+ customers must offer a tariff for electricity exported to the grid by small-scale generators. You can earn 3–30p/kWh for surplus solar electricity, depending on your supplier and tariff type.
| Supplier | SEG Tariff |
|---|---|
| Octopus Energy (Outgoing Fixed) | 12p/kWh (flat) |
| Octopus Energy (Intelligent Flux) | Up to ~30p/kWh (peak, requires battery) |
| EDF Energy | 4.6p/kWh |
| British Gas | 3.3p/kWh |
| E.ON Next | 4.1p/kWh |
| Scottish Power | 3.5p/kWh |
| OVO Energy | 4.0p/kWh |
| Shell Energy | 3.5p/kWh |
Rates are set by individual suppliers and can change. Always verify directly with your supplier. Self-consumption (avoiding grid imports at 24–28p/kWh) is more valuable than exporting.
Requirements for SEG Payments
- ✓ Smart meter installed (or SMETS2 compatible meter)
- ✓ MCS-certified installation (your installer handles the certification)
- ✓ G98/G99 notification or application to your DNO for grid connection
- ✓ System up to 5 MW capacity (residential systems are typically 3–4 kWp)
ECO4 Has Ended: The Warm Homes Plan Replaces It
The ECO4 scheme ended on 31 March 2026. It has been replaced by the government's Warm Homes Plan, announced in January 2026, which commits £15 billion to upgrade up to 5 million homes by 2030.
The Warm Homes Plan provides grants and interest-free loans for solar panels, battery storage, insulation, and heat pumps through three delivery routes:
Warm Homes: Local Grant
England. Replaces the Local Authority Delivery scheme. Grants for solar, insulation, and low-carbon heating for eligible households.
Warm Homes Nest
Wales. Can fund up to 100% of installation costs for eligible households including solar PV and battery storage.
Warmer Homes Scotland
Scotland. Continuing programme providing energy efficiency measures and renewable heating for qualifying households.
Previously: ECO4 provided fully funded solar and insulation for low-income households from April 2022 to March 2026. See our ECO4 scheme guide for historical details.
What is the Home Upgrade Grant (HUG2)?
The Home Upgrade Grant Phase 2 (HUG2) provides up to £10,000 per household for energy efficiency improvements including solar PV, insulation, and heat pumps. It targets homes that are off the mains gas grid with an EPC rating of D, E, F, or G.
Eligibility criteria:
- ✓ Home is off the mains gas grid (or uses high-carbon heating)
- ✓ EPC rating of D, E, F, or G
- ✓ Household income of £31,000 or less
- ✓ Homeowner or private tenant in England
What's covered
- ✓ Solar PV panels
- ✓ Insulation (cavity, solid wall, loft)
- ✓ Heat pumps (air source or ground source)
- ✓ Draught proofing and heating controls
HUG2 is delivered through local authorities in England. Contact your council to check if funding is available in your area. Administered by the Department for Energy Security & Net Zero.
What is the Great British Insulation Scheme?
The Great British Insulation Scheme (GBIS) provides funded insulation improvements to eligible homes across the UK. While not directly a solar scheme, improved insulation reduces overall energy demand and maximises the benefit of solar panels.
General eligibility
- ✓ Homes in Council Tax bands A–D (England) or A–E (Scotland/Wales)
- ✓ EPC rating of D, E, F, or G
- ✓ Specific insulation measures available for your property type
Low-income eligibility
- ✓ Receiving qualifying benefits (similar to ECO4)
- ✓ Any Council Tax band
- ✓ EPC rating of D, E, F, or G
The scheme covers cavity wall insulation, loft insulation, solid wall insulation, flat roof insulation, and room-in-roof insulation. Contact your energy supplier or check gov.uk for details.
What is the Boiler Upgrade Scheme (BUS)?
The Boiler Upgrade Scheme (BUS) offers upfront vouchers of £7,500 towards the cost of installing an air source or ground source heat pump in England and Wales. While not a solar grant, many homeowners combine heat pumps with solar PV to maximise energy savings.
Voucher amounts
- ✓ Air source heat pump: £7,500
- ✓ Ground source heat pump: £7,500
- ✓ Biomass boiler: £5,000 (rural properties only)
Eligibility
- ✓ Property in England or Wales
- ✓ Replacing an existing fossil fuel heating system
- ✓ Valid EPC with no outstanding recommendations for loft or cavity wall insulation
- ✓ MCS-certified installer must apply for the voucher
The BUS is administered by Ofgem and runs until March 2028. Your MCS-certified installer applies for the voucher on your behalf.
How do you get solar panels installed with 0% VAT in the UK?
Unlike grant schemes that require pre-approval, the 0% VAT saving on residential solar is applied automatically at the point of sale. Simply choose an MCS-certified installer, and the VAT-free price is reflected on your invoice. For SEG payments, your installer registers the system with MCS and your DNO.
Get Quotes from MCS-Certified Installers
Choose a company from the MCS Certified installer directory at mcscertified.com. Get at least two or three quotes and compare system specifications, warranties, and total costs.
Confirm 0% VAT on Your Quote
Your installer should apply 0% VAT automatically for residential installations. Check the quote clearly shows zero VAT for supply and installation of solar panels.
Installation (1–2 Days)
Your MCS-certified installer carries out the installation, typically in 1–2 days. They handle all electrical works and ensure the system meets MCS standards and building regulations.
DNO Notification (G98/G99)
Your installer submits a G98 notification (for systems up to 3.68 kW per phase) or G99 application (larger systems) to your Distribution Network Operator (DNO) for grid connection approval.
MCS Certificate and Handover
Your installer issues an MCS certificate, which is required to register for the Smart Export Guarantee. They also provide electrical completion certificates and system documentation.
Register for Smart Export Guarantee
Choose an energy supplier offering a SEG tariff and register your MCS-certified system. You will need your MCS certificate number and a smart meter.
Start Earning from Exported Electricity
Once registered, you earn SEG payments (3–30p/kWh) for every unit of electricity you export to the grid. Payments are typically made quarterly.
Can businesses claim tax relief on solar panels in the UK?
Businesses can claim 100% tax relief in Year 1 on solar PV investments through the Annual Investment Allowance (AIA), which allows the full cost to be deducted from taxable profits in the year of purchase, up to £1,000,000.
Who qualifies
- ✓ Companies (corporation tax)
- ✓ Sole traders (income tax)
- ✓ Partnerships and LLPs
- ✓ Farms and agricultural businesses
Requirements
- ✓ Equipment must be new (not second-hand)
- ✓ Must be used for business purposes
- ✓ Annual Investment Allowance limit: £1,000,000
- ✓ Commercial installations subject to standard 20% VAT (reclaimable if VAT-registered)
Example: A £50,000 solar PV system at the 25% corporation tax rate yields a £12,500 tax saving in Year 1. VAT-registered businesses can also reclaim the 20% VAT (£10,000).
Can you get solar panels for free in the UK?
Some households can get solar panels completely free through the Warm Homes Plan (which replaced ECO4 in March 2026) or HUG2 (Home Upgrade Grant). To qualify, you typically need to be on means-tested benefits and live in a home with a low EPC rating (D–G). For most homeowners, the combination of 0% VAT (saving £1,000+) and SEG income (3–30p/kWh) significantly reduces the effective cost. Payback is typically 6–9 years, after which the electricity is essentially free for 25+ years.
What's new for UK solar incentives in 2026?
0% VAT Extended to 2027
The 0% VAT rate on residential solar installations has been confirmed until at least March 2027, saving homeowners approximately £1,000–£1,400 compared to the standard 20% VAT rate.
“The UK aims to quintuple solar power capacity to 70 GW by 2035 as part of its clean energy transition. Residential rooftop solar is a key part of reaching net zero.”
Boiler Upgrade Scheme Increased
The BUS voucher for heat pumps increased from £5,000 to £7,500 in October 2023 and has been extended until March 2028. Combine a heat pump with solar PV for maximum savings.
Growing SEG Competition
More energy suppliers are offering competitive SEG tariffs, with Octopus Energy's Intelligent Flux tariff offering up to ~30p/kWh (peak hours, requires battery) and Outgoing Fixed at 12p/kWh flat for time-of-use export. Shop around for the best rates.
1,500,000+ Solar Rooftops
Over 1,500,000+ UK homes now have solar panels installed, with record installation rates in 2024 and 2025 driven by high energy prices and 0% VAT.
Great British Insulation Scheme
The GBIS provides funded insulation for homes in Council Tax bands A–D with an EPC rating of D–G. Better insulation maximises solar savings by reducing overall energy demand.
Warm Homes Plan Replaces ECO4
ECO4 ended in March 2026. The Warm Homes Plan now provides £15 billion for home energy upgrades including solar, battery storage, and insulation, targeting 5 million homes by 2030.
£150 Off Energy Bills
From April 2026, the government is covering 75% of the Renewables Obligation levy for 3 years, reducing average household energy bills by approximately £150/year.
Plug-In Solar Panels Coming
The government has committed to legalising plug-in balcony solar panels for the first time in the UK, opening up solar to renters and flat owners. Read our plug-in solar guide.
Frequently Asked Questions About UK Solar Incentives
What solar incentives are available in the UK in 2026?
The main UK solar incentives in 2026 are 0% VAT on residential installations (saving £1,000+), the Smart Export Guarantee paying 3–30p/kWh for exported electricity, the Warm Homes Plan (replacing ECO4) with grants and interest-free loans for eligible households, HUG2 grants up to £10,000 for off-gas homes, £150/year off energy bills from the government covering the Renewables Obligation levy, and the Annual Investment Allowance for business tax relief.
Are there grants for solar panels in the UK?
There is no universal upfront solar grant, but several schemes help eligible UK households: the Warm Homes Plan (replacing ECO4 from March 2026), HUG2 for off-gas-grid homes, Home Energy Scotland Loan (up to £7,500 interest-free), Nest in Wales, Warmer Homes Scotland, and local-authority grants. All residential installs also qualify for 0% VAT until 31 March 2027, saving around £1,000–£1,400.
Can you get free solar panels in the UK?
Yes in specific circumstances. Means-tested schemes like ECO4 (via the Warm Homes Plan from 2026), HUG2, and Warmer Homes Scotland can fully fund solar for low-income households on qualifying benefits with an EPC rating of D–G. Apply via your energy supplier's ECO4 Flex route or your local authority. Private lease-based “free solar” offers also exist but typically retain most of the savings for the provider.
How much do solar panels cost in the UK?
A typical 4 kWp residential system costs £5,000–£7,000 fully installed at 0% VAT (approximately £1,400 per kWp). Adding a 5 kWh battery adds £2,500–£4,500. With SEG income and bill savings, payback is typically 6–8 years.
Do I need an EPC assessment?
An EPC (Energy Performance Certificate) is needed for means-tested schemes like ECO4, HUG2, and the Boiler Upgrade Scheme. For a standard solar installation with 0% VAT, no EPC is required. Installing solar typically improves your EPC rating, which adds property value.
How do I get an MCS certificate for my solar panels?
Your MCS-certified installer handles the MCS certification process. MCS (Microgeneration Certification Scheme) is required for SEG registration and 0% VAT. Only use installers listed on the MCS directory at mcscertified.com.
How long does a solar panel installation take?
Physical installation takes 1–2 days. The full process from quotes to receiving SEG payments typically takes 4–8 weeks, including DNO notification and smart meter installation if needed. See our dedicated timeline guide.
Can a landlord install solar panels and claim 0% VAT?
Yes. The 0% VAT applies to residential properties regardless of whether the owner is an occupier or a landlord. The property must be a dwelling, and the supply and installation must be under a single contract.
Is the Smart Export Guarantee available across the UK?
Yes. The SEG applies in England, Scotland, and Wales. In Northern Ireland, similar export payment arrangements are available through NIE Networks.
Solar incentives and installers in your area
See area-specific solar savings, payback periods, and MCS-certified installers across the UK.
Solar incentives including 0% VAT and the Smart Export Guarantee apply across England, Scotland, Wales, and Northern Ireland. ECO4 and HUG2 availability varies by local authority.
Related Guides
Sources
- 0% VAT on Energy-Saving Materials (HMRC): gov.uk
- Smart Export Guarantee (Ofgem): ofgem.gov.uk
- ECO4 Scheme (Ofgem): ofgem.gov.uk
- Home Upgrade Grant (HUG2): gov.uk
- Boiler Upgrade Scheme (Ofgem): ofgem.gov.uk
- MCS Certified Installers: mcscertified.com
- Annual Investment Allowance (HMRC): gov.uk
John Rooney is the founder of Solar Info and has been covering the UK solar energy market since 2023. He fact-checks all content against official MCS and Ofgem data and maintains relationships with MCS-certified installers across the UK.
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