Budget 2026: what it means for solar panels on your home

What the Budget does to your energy bills

The Budget pairs short-term bill relief with longer-term reforms to how bills are built.

Household energy prices are now around 73% higher than their 2020 average, and the Office for Budget Responsibility expects inflation to peak at 3.8% early in 2027. These are the measures that touch a household's electricity and gas bills:

The £100 payment is funded by a temporary rise in the bank corporation tax surcharge, from 3% to 6% between January 2027 and March 2028. The government will also bring forward an Energy Independence Bill to legislate for some of these changes.

Source: Budget 2026 report, Box 3.A and paragraphs 3.4 to 3.11 and 6.24 to 6.28.

The solar VAT deadline is now confirmed

This is the Budget decision that matters most if you're planning solar: the zero rate of VAT on solar panels and batteries ends on 31 March 2027, as planned.

The Budget states that VAT on energy-saving materials will revert to the 5% reduced rate from 1 April 2027 (paragraph 6.215). There had been industry calls to make the zero rate permanent; the government chose not to.

What it covers

The relief applies to energy-saving materials installed in homes, including:

• solar panels and their installation
• home batteries, whether fitted with new panels, added to an existing system, or installed on their own
• solar diverters, which send surplus power to your hot water cylinder
• heat pumps and insulation

The Budget also adds heat batteries to the list. They'll qualify for the 5% rate from 1 April 2027.

What 5% VAT adds

Pick a typical system, or drag the slider to your own quote, to see the price before and after 1 April 2027.

Which date counts

VAT generally applies at the rate in force when the work is completed or invoiced and paid. A deposit invoiced and paid before 1 April is likely to stay at 0%, but a balance invoiced after the job finishes in April or later would normally carry 5%. Ask your installer to confirm in writing how they'll invoice.

The Warm Homes Loan Scheme

There's no new grant for most homeowners. Instead, the Budget points to the Warm Homes Loan Scheme, which opened on 27 October 2026.

The Budget confirms the scheme as the government's route to support “heat pump and clean technology uptake”. It offers government-backed loans through participating lenders. The government says some are interest-free, and that scheme rates are up to 5% lower than regular loans from banks or high-street lenders.

The facts

• Lenders: ten at launch, in the order the government lists them: HomeServe, Hometree Finance, Propensio, Secure Trust Bank, Selina Finance, South Manchester Credit Union, Sunsave, Tandem Bank, The Money Co-op, thisbank. The GOV.UK lenders page has the current list.
• Terms: vary by lender; the government says some allow up to 30 years.
• Where: across the UK, according to the government.
• Installer: the work must be done by an MCS-certified installer.
• Checks: lenders run their normal affordability and credit checks.

The government estimates that solar panels, a battery and a heat pump together could cut bills by up to £550 a year, plus around £300 more on a time-of-use tariff.

Our Warm Homes Loan guide covers the scheme in full: limits, eligibility and how applying works.

Grants after the Budget: trimmed, not scrapped

The Warm Homes Plan loses £1 billion of capital grant, but the Budget says most of the money for low-income households is protected.

The energy department is cutting its budget to help fund the Defence Investment Plan, and the Warm Homes Plan is one of the areas affected (paragraph 4.36).

• Free upgrades for low-income homes: the Budget says the majority of Warm Homes Plan funding for low-income households and social housing, delivered by mayors and councils, is protected. The £15 billion plan launched in January includes fully funded solar and battery installations worth up to £12,000 for eligible homes.
• The £1 billion saving: the Budget doesn't say which parts of the plan lose out. Some Warm Homes Fund money is also being moved to fund the new Your First Home scheme for first-time buyers.
• Heat pump grant kept: despite reports before the Budget that it would be cut, the Boiler Upgrade Scheme stays at its current funding of £400 million in 2027 to 2028, rising broadly with inflation after that.
• No new solar grant: there's no grant for solar panels for homeowners who don't qualify for low-income support. The Warm Homes Loan Scheme is the government's offer for everyone else.

If you might qualify for a fully funded installation, check with your local council before paying for solar yourself.

Is solar worth it after the Budget? Costs, savings and payback

Yes, for most homes with a suitable roof. Energy prices remain high, which keeps solar's savings strong.

Solar saves you money by replacing electricity you'd otherwise buy, so the higher grid prices are, the more it saves.

What a system costs

Typical installed prices with 0% VAT, as of October 2026:

What it saves

The biggest saving comes from electricity you use as it's generated. A household with a 4kW system that uses around 1,050kWh of its own generation a year saves roughly £261 to £332 a year on bills, before export income, depending on the unit rate. Slide to your own usage:

The rest of your generation goes to the grid and earns export payments (see getting paid for exports below). Most households see a payback of roughly 8 to 12 years on panels alone, and panels typically last 25 to 30 years.

Why our payback figure is shorter

Across Geko's own installs, many of which pair panels with a battery on a time-of-use tariff, we typically see payback in around 5 to 6 years. The difference is the battery: it lets a home use far more of its own solar, and charge on cheap overnight rates, so each year saves more. The 8 to 12 years is for panels alone. Our figure is Geko's own, and your result depends on your home and usage.

How the Budget affects your savings

• 5% VAT on installation from 1 April: adds £300 to £400 to a typical 4kW system. Installs completed by 31 March 2027 avoid it.
• Possible boost from standing charge reform: if electricity standing charges are folded into the unit rate, each solar unit you use would save more. Details are due next year.
• Steadier prices over time: the cap on new policy costs and the move to fix prices for some renewable generators aim to keep electricity cheaper and less tied to gas. That makes savings more predictable.
• No direct effect from the gas changes: solar only offsets electricity.

Should you install solar now or wait?

Now that the Budget has confirmed 5% VAT from 1 April 2027, there's no reason to wait for a better tax deal: aim to have your installation finished and invoiced by 31 March 2027.

Gas standing charges are due to go by the end of 2027, and electricity standing charge plans are due next year. Neither has a fixed date yet, so they aren't shown.

• Act before April: the 5% VAT is confirmed, and installers are likely to get busier as the deadline nears.
• Wait only if you're close to qualifying for fully funded Warm Homes Plan support, since a free installation beats any VAT saving.
• Don't wait for electricity prices to fall. Electricity prices remain well above their 2020 level, and every unit your panels make is one you don't buy.
• Check with your installer how VAT is charged on deposits and final invoices. The rate that applies generally follows when the work is invoiced and completed.

Step by step: getting solar fitted before 1 April 2027

Start now: surveys, quotes and installation can take several weeks, and the confirmed VAT deadline is likely to bring a rush in early 2027.

1. 1Check your roof. South, east or west-facing roofs with little shade work best. If the roof needs replacing within a few years, do that first.
2. 2Check planning. Most rooftop solar on houses doesn't need planning permission, but listed buildings, flats and some conservation areas can be different. If in doubt, ask your council.
3. 3Check whether you qualify for free upgrades. Low-income households may get a fully funded installation through the Warm Homes Plan, via your council.
4. 4Look at your usage. Find your yearly electricity use on a recent bill. It decides the system size, and whether a battery makes sense.
5. 5Get two or three quotes from MCS-certified installers. MCS certification is required for the Warm Homes Loan Scheme and for export payments. Compare system size, panel and inverter brands, warranties and estimated yearly generation, not just the price. Our guide to comparing solar quotes covers what to look for.
6. 6Decide on a battery. If you're out during the day, a battery lets you use more of your own generation in the evening. It's also VAT-free until 31 March.
7. 7Agree the timeline in writing. Ask the installer to confirm the work will be finished and invoiced before 31 March 2027, and how VAT applies to any deposit.
8. 8Get a smart meter and an export tariff. You need a smart meter that records exports to be paid for surplus electricity. Your installer will notify the local network operator and give you an MCS certificate for your export tariff application.

Already have solar? What the Budget means for you

If you already have panels, they keep earning as before, and the Budget sets a clear deadline for any upgrade, such as a battery.

The UK passed two million solar installations this year, so this applies to a lot of homes.

Your bill savings

With 0% VAT on household electricity until 1 July 2027, every unit you buy from the grid is a little cheaper, so your total bill falls. Your panels keep cutting the units you buy in the first place.

The Budget commits to reforming electricity standing charges, with details next year. If fixed costs are moved into the unit rate, as is happening with gas, solar homes would generally gain: less paid in fixed fees, and more saved on every unit your panels cover. Until the details are out, that's a possibility, not a promise.

Your upgrade deadline

Anything you add to your system that counts as an energy-saving material is VAT-free only until 31 March 2027. That includes a battery, a solar diverter or extra panels. After that, 5% applies.

Your export income

The Budget makes no change to the Smart Export Guarantee. Rates are set by suppliers, and switching tariff can raise what you earn. See the export section below.

If you're on the Feed-in Tariff

The Budget makes no change to Feed-in Tariff payments for homes that installed solar before the scheme closed in 2019. The Feed-in Tariff's costs stay on household bills; the Budget only exempts eligible energy-intensive manufacturers from them through the new British Industrial Competitiveness Scheme.

Your £100 energy payment

If you live in England and your home is in council tax bands A to D, you'll get the £100 Household Energy Payment as a council tax rebate from January 2027, whether or not you have solar. In Scotland, Wales and Northern Ireland, devolved governments receive funding to provide similar support.

Adding a battery to panels you already have

For many existing solar owners, a battery is the upgrade to make before 31 March 2027, while it's VAT-free.

Without a battery, much of the electricity your panels make in the middle of the day goes to the grid for a few pence a unit, while you buy it back in the evening at full price. A battery stores that surplus so you can use it later.

• VAT: batteries have qualified for 0% VAT since February 2024, whether added to an existing system or installed on their own. The Budget confirms they move to 5% on 1 April 2027.
• Cost: a 5–10kWh battery typically costs £3,000–£6,500 installed, so 5% VAT would add £150–£325.
• Warm Homes Loan Scheme: covers battery storage in its own right, up to £15,000, according to the government. The install must be by an MCS-certified installer. How the scheme works.
• Savings: in an energy supplier trial in Coventry, fuel-poor households saved more than £250 a year on average by pairing a battery with a time-of-use tariff.
• Lifespan: batteries typically last 10 to 15 years. The Fox ESS and Sigenergy batteries we fit come with a 10-year manufacturer warranty.

A cheaper alternative: solar diverters send surplus electricity to your hot water cylinder instead of the grid. They qualify for the same VAT relief, cost far less than a battery, and suit homes with an immersion heater.

Heat batteries store energy as heat for hot water or heating. The Budget adds them to the list of energy-saving materials at the 5% VAT rate from 1 April 2027.

Before adding a battery, check your inverter. Older systems may need a new inverter, or a battery with its own built-in inverter, so ask your installer what's compatible. More in battery or no battery.

Getting paid for your exports

Whether you're buying solar or already have it, the export tariff you choose can be worth more than all the Budget's bill changes combined.

Under the Smart Export Guarantee, large electricity suppliers must pay you for surplus electricity you send to the grid. There's no set rate, only that it must be above zero, so payments vary widely. The Budget makes no change to the scheme.

How to check you're on a good deal

1. 1Find your current export rate on your latest statement or supplier app.
2. 2Compare it with Solar Energy UK's league table, which is updated regularly.
3. 3Weigh the export rate against the import tariff it comes with. A higher export rate isn't worth it if your import costs rise by more.
4. 4If you have a battery, look at time-of-use export tariffs, which pay more for electricity exported at peak times.

More in our Smart Export Guarantee explainer.

What the Budget didn't change for solar

Apart from confirming the VAT deadline, the Budget leaves the schemes solar homes rely on as they are.

These are unchanged:

• Smart Export Guarantee: no change to how export payments work.
• Feed-in Tariff: no change for existing recipients.
• Plug-in solar: plug-in “balcony” solar remains legal in England, Scotland and Wales for systems up to 800W, as it has been since 27 August 2026. The government says it could cut bills by up to £110 a year, compared with up to £480 a year from rooftop solar.
• New homes: the Budget says there'll be no major changes to building regulations for the rest of this Parliament, other than for building safety. It doesn't change the existing rules that make solar standard on new homes.
• Planning: no changes to the rules for fitting solar panels on homes.

The Budget's wider energy changes, such as fixing prices for some renewable generators and new grid investment, are aimed at large-scale power, not rooftops.

Who gains most from the Budget

Homeowners who can act before April gain most: 0% VAT runs until 31 March 2027.

What to watch next

• The January 2027 price cap. A sharp rise would shorten solar payback periods, whatever the Budget did.
• Electricity standing charge reform. Details are due next year. How it's done will decide whether solar homes gain from it.
• The Energy Independence Bill. The government says it will “shortly” bring forward a bill to legislate for some of the Budget's energy measures.
• The wholesale Contracts for Difference consultation. Published alongside the Budget, it's the next step in weakening the link between gas and electricity prices.
• The 2027 spending review and the 10 Year Plan. The spending review will set the Cost Control Framework for energy bills, and the plan will cover wider electricity market reform.
• Which Warm Homes Plan schemes lose funding. The Budget saves £1 billion of grant without saying where; details should follow from the energy department.

Our verdict

For homeowners considering solar, this Budget brings certainty: the VAT deadline is fixed at 31 March 2027.

The Budget's energy measures focus on short-term bill relief and long-term reform of how bills are built. The case for solar stays strong, and the confirmed VAT change gives a clear reason to act before April.

If you're thinking about solar, get quotes now, and aim to have the work finished and invoiced by 31 March 2027.

If you already have solar, check your export tariff, and get a battery quote while it's VAT-free.