Will zero VAT on UK heat pumps and solar panels run past March? Most such cuts did.

What happened

Heat pump and solar groups and the Liberal Democrats ask the government to keep zero VAT on home installs after 31 March 2027.

Since 2022, fitting energy-saving products at home has had no VAT. This covers heat pumps and solar panels, among other products, and in Northern Ireland the zero rate began in May 2023. HMRC, the UK tax office, says the zero rate runs to 31 March 2027, and from 1 April the rate goes back to 5%.

The Budget of 28 October kept that end date. Its list of tax changes says the rate “will revert to 5 per cent from 1 April 2027”, as planned in 2022, and adds heat batteries to the relief from the same day. The same Budget, from Chancellor John Healey, kept 0% VAT on household electricity until July 2027 and started Warm Homes loans to help families pay for solar panels and heat pumps.

The Budget also moved money from green heating to defence. The energy department lost more than £3bn, including £741m from the Boiler Upgrade Scheme, which gives grants for heat pumps. In 2022 the government expected the zero rate to cost up to £65m a year in lost tax.

On 9 November heat pump and solar groups asked for a change of course. Charlotte Lee, who leads the Heat Pump Association, warned of “a rush of applications ahead of April”. Chris Hewett of Solar Energy UK said: “We will be urging the government to reverse course”. The Liberal Democrats say a home that adds a heat pump and solar panels with a battery could pay up to £1,530 more.

The government has said nothing new about the rate. A spokesperson for the energy department pointed to record heat pump applications and the new loans, and did not mention VAT.

From 1 April 2027 onwards, supplies of installations of energy-saving materials will revert to the reduced rate of VAT of 5%.

HMRC, VAT Notice 708/6

Sources: The Guardian (2), GOV.UK (2, 3, 4)

The Pattern

We looked for cases where a UK Budget or autumn statement let a temporary tax cut run to its end date, 60 days or more away, while cutting spending elsewhere. We found fourteen from 1992 to 2025. We left out five: in three the trade spoke about the end date without warning of a rush, and in two the opposition spoke about it without asking to keep the cut. Four of the nine left were stamp duty cuts for home buyers. (Hansard; GOV.UK; GOV.UK; BBC)

Show the other 7 cases

2023 UK, fuel duty, 2023held

The 5p cut in fuel duty from March 2022 was set to end on 23 March 2023. The autumn statement of 17 November 2022 did not decide it, and the Budget of 15 March 2023 extended it for 12 months.

2020 UK, business investment, 2020held

Businesses could take up to £1m a year of spending on equipment off their taxable profits until 31 December 2020, then £200,000. The Budget of March 2020 left it, and on 12 November the government added a year.

2015 UK, business investment, 2015held

Businesses could take up to £500,000 a year of equipment spending off their profits until 31 December 2015, then £25,000. On 18 March 2015 Chancellor George Osborne promised more, set in July at £200,000 for good.

2014 UK, business investment, 2014held

Businesses could take up to £250,000 a year of equipment spending off their profits until 31 December 2014, then £25,000. The Budget of 19 March 2014 raised it to £500,000 to the end of 2015.

2012 UK, first-home stamp duty, 2012not held

From March 2010, first-time buyers paid no stamp duty on homes up to £250,000, for two years. Chancellor George Osborne’s autumn statement of 29 November 2011 did not extend it, and it ended at midnight on 24 March 2012.

2009 UK, stamp duty holiday, 2009held

From 3 September 2008, homes up to £175,000 paid no stamp duty, for one year. The Pre-Budget Report of November 2008 left that date, and the Budget of 22 April 2009 extended it to the end of 2009.

1992 UK, stamp duty, 1992not held

From December 1991, homes up to £250,000 paid no stamp duty, up from £30,000, until 19 August 1992. The 1992 Budget law did not extend it. In July a minister said there were no plans to, and it ended in August.

The Read

Six of the nine past tax cuts were extended, and none of those came sooner than 104 days after the Budget that left the end date. Here that would be 9 February 2027. Five of the six came in the next full Budget, each time in spring, and the fuel duty cut that also ended in late March was extended in a March Budget, 8 days before the end. Three of the six kept the same or a higher level for at least 12 more months.

There are reasons for doubt. Each time it was the same Treasury deciding. All five Budget extensions came in spring, but since 2024 the government has promised “one major fiscal event a year”, and in spring 2026 it gave only a statement to Parliament. This time the Budget papers also wrote the 5% date down again. In 2011 the autumn statement did the same for the first-home stamp duty cut, and that cut ended. Only one of the four stamp duty cuts for home buyers was extended.

Sources: GOV.UK (2, 3, 4, 5, 6, 7), GOV.UK (2), The Guardian (2), BBC