Solar Panel Grants & Incentives in the UK 2026
There is no single grant that pays for the whole installation, but the combination of 0% VAT, the Smart Export Guarantee, and targeted schemes like ECO4 can significantly reduce the cost of going solar. Here is everything that is available and how to claim it.
0%
VAT rate
£1,000+
VAT saving
3–15p/kWh
SEG income
Up to 100%
ECO4
What Financial Support Is Available?
A quick overview of every current scheme, who qualifies, and what it is worth.
0% VAT on solar installations
All residential properties · Saves £1,000–£1,500
Smart Export Guarantee (SEG)
Anyone with MCS-certified solar + smart meter · £75–£200/year in export income
ECO4 scheme
Low-income households on qualifying benefits · Up to 100% of installation cost
Local authority grants
Varies by council area · Varies - £500 to full funding
Green Homes Grant
N/A · Was up to £5,000
Feed-in Tariff (FiT)
Existing installations only · Was 1–5p/kWh generation + export
0% VAT on Solar Panel Installations
Since April 2022, residential solar panel installations have attracted 0% VAT instead of the standard 20%. This is one of the most significant financial incentives currently available.
What it covers
The 0% rate applies to the supply and installation of solar PV panels on residential properties. It also covers battery storage systems installed at the same time as solar panels. The relief applies to both the equipment and the labour.
How much it saves
For a typical 4kW installation costing £7,000, the 0% VAT saves roughly £1,170 compared to the standard 20% rate. For a larger system with battery storage, the saving can exceed £2,000. This is applied automatically by your installer - you should see 0% VAT on the invoice.
How long it lasts
The 0% rate is currently confirmed until 31 March 2027. It was originally set to revert to 5% in April 2027, but the government has indicated it may be extended. If you are considering solar panels, the 0% rate provides an additional reason to act before 2027.
Who qualifies
Any residential property in England, Scotland, Wales, or Northern Ireland. The installation must be carried out by an MCS-certified installer. Second homes and buy-to-let properties also qualify - it is the property type (residential), not ownership status, that matters.
Check your invoice. Some installers have been found charging 5% or 20% VAT on installations that should be at 0%. If you see any VAT on a residential solar panel installation, query it with the installer. The 0% rate has been in effect since April 2022.
Smart Export Guarantee (SEG)
The Smart Export Guarantee requires large energy suppliers to pay you for surplus electricity you export to the grid. It replaced the Feed-in Tariff export element in January 2020. For independent advice on making the most of solar panels, see the Energy Saving Trust solar guide.
How it works
When your solar panels generate more electricity than you are using, the surplus is exported to the national grid. Your smart meter records how much you export, and your SEG supplier pays you for each kilowatt-hour. You receive quarterly or monthly payments depending on the supplier.
How much you can earn
A typical 4kW system exports roughly 1,500–2,000 kWh per year (around half of total generation, assuming no battery). At an average fixed SEG rate of 4–5p/kWh, that is £60–£100 per year. Variable tariffs like Octopus Outgoing can pay more - up to £150–£200 per year - but the rate fluctuates with wholesale prices.
Eligibility requirements
You need an MCS-certified installation (or equivalent), a smart meter or export meter that can measure your exports, and a generating capacity of 5MW or less (virtually all residential systems qualify). You can choose any SEG supplier - you do not have to use your existing energy company.
SEG Tariff Comparison (2026)
| Supplier | Rate |
|---|---|
| Octopus Energy | Up to 15p/kWh |
| EDF Energy | 4.6p/kWh |
| British Gas | 3.3p/kWh |
| Ovo Energy | 4.0p/kWh |
| E.ON Next | 4.1p/kWh |
| Scottish Power | 3.5p/kWh |
Rates correct as of April 2026. SEG tariffs change frequently - check each supplier's website for the latest rates before signing up.
ECO4 Scheme - Free Solar Panels for Qualifying Households
The Energy Company Obligation (ECO4) scheme ran until March 2026 and required large energy suppliers to fund energy efficiency improvements for low-income and vulnerable households. Solar panels were one of the eligible measures. A successor scheme is expected — check gov.uk for the latest on available funding.
Who qualifies
You may be eligible if you receive qualifying benefits (Universal Credit, Pension Credit, Child Tax Credit, Working Tax Credit, Income Support, JSA, ESA, or Housing Benefit) and your home has an EPC rating of D, E, F, or G. Your energy supplier or a local scheme administrator can confirm eligibility.
What it covers
The ECO4 scheme can fund the full cost of a solar panel installation, including battery storage in some cases. It is often combined with other efficiency measures like insulation or a new boiler. The exact package depends on your home and what the assessor recommends.
How to apply
Contact your energy supplier to ask about ECO4, or search for local ECO4 installers in your area. Your local council may also run a referral service. Be wary of unsolicited calls or door-to-door salespeople offering 'free government solar panels' - legitimate schemes do not operate this way.
What happens next
The ECO4 scheme is due to be replaced by a successor programme. The Great British Energy initiative and the Warm Homes Plan may include solar panel support for low-income households. Keep an eye on government announcements for updates.
Watch out for scams. If someone contacts you out of the blue offering free solar panels from the government, be cautious. Legitimate ECO4 installers do not cold-call or pressure you into signing. Always verify the installer is MCS-certified and the scheme is genuine through your energy supplier or local authority.
Local Authority Grants
Some local councils run their own solar panel grant schemes, interest-free loan programmes, or bulk-buy discount schemes. These vary significantly by area and often change from year to year.
Council-run group buying schemes
Several councils partner with organisations like Solar Together (run by iChoosr) to negotiate bulk-buy discounts for residents. These group-buying schemes can cut the cost of a solar installation by 20–30% compared to getting quotes independently. Check your council's website for current schemes.
Home Upgrade Grant (HUG2)
The Home Upgrade Grant provides funding for energy efficiency improvements to homes not connected to the gas grid. Solar panels are an eligible measure in some areas. It is administered by local authorities and targets low-income households. Contact your council to check if HUG2 funding is available in your area.
Scotland - Home Energy Scotland
Scottish homeowners can access interest-free loans of up to £7,500 for solar panel installations through Home Energy Scotland. Additional cashback grants of up to £1,250 may be available for qualifying households. Call Home Energy Scotland on 0808 808 2282 for details.
Wales - Nest and Eco Flex
The Welsh Government's Nest scheme provides free home energy improvements to qualifying households, including solar panels. The scheme is means-tested. Contact Nest on 0808 808 2244 to check eligibility.
Schemes That Are No Longer Available
These schemes come up frequently in searches. If you are looking for them, here is what happened and what replaced them.
Green Homes Grant (closed March 2021)
The Green Homes Grant voucher scheme offered up to £5,000 (or £10,000 for low-income households) towards energy efficiency measures including solar panels. It ran for just six months before being scrapped due to administrative problems. It has not been directly replaced, though the 0% VAT rate and ECO4 scheme partially fill the gap.
Feed-in Tariff (closed March 2019)
The Feed-in Tariff (FiT) paid homeowners a guaranteed rate for every kWh of electricity generated (not just exported). At its peak, the FiT paid over 40p/kWh. When it closed, the generation tariff was around 3.5p/kWh. If you already have a FiT contract, it continues for the full term (20 or 25 years). New installations now use the Smart Export Guarantee, which pays only for exported electricity - not for generation.
Renewable Heat Incentive (closed March 2022)
The RHI paid homeowners for renewable heat generation (heat pumps, biomass, solar thermal). Solar PV panels were not directly eligible, but solar thermal panels were. The scheme closed to new applicants in March 2022 and has been replaced by the Boiler Upgrade Scheme, which covers heat pumps but not solar panels.
How to Maximise Your Solar Panel Returns
The financial return on solar panels depends less on grants and more on how you use the system day to day. Here is how to get the most out of your investment.
Maximise self-consumption
Electricity you use directly from your panels saves you the full retail rate (around 24p/kWh). Exported electricity earns you only 3–15p/kWh via the SEG. Run your washing machine, dishwasher, tumble dryer, and EV charger during daylight hours when the panels are generating. Simple timers on these appliances make this effortless.
Consider a battery
A battery stores daytime surplus for evening use, increasing self-consumption from around 40% to 70–80%. This means more of your electricity costs nothing. A 5kWh battery costs £2,800–£4,200 and typically pays for itself in 8–12 years. The 0% VAT applies to batteries installed alongside solar panels.
Choose the best SEG tariff
You are not tied to your existing energy supplier for SEG. Shop around - rates range from under 3p/kWh to 15p/kWh. Variable tariffs like Octopus Outgoing can pay significantly more during peak demand periods but fluctuate. A fixed tariff gives certainty. You can switch SEG supplier at any time.
Pair with a time-of-use energy tariff
If you have a battery, a time-of-use tariff like Octopus Go lets you charge the battery cheaply overnight (around 7.5p/kWh) and use that stored electricity during peak hours when the grid rate is higher. Combined with solar generation during the day, this can dramatically cut your overall energy costs.
Keep panels clean and unshaded
Dirty panels lose 5–15% of their output. While UK rain usually handles cleaning, panels under trees that drop sap, leaves, or bird droppings benefit from an annual clean (£100–£200). Make sure no new structures, fences, or tree growth are creating new shading issues.
Frequently Asked Questions
Can I get a government grant for solar panels in the UK?
There is no universal government grant that covers the full cost of solar panels for all homeowners. However, the 0% VAT rate saves over £1,000 on a typical installation, the Smart Export Guarantee pays you for surplus electricity, and the ECO4 scheme can fund installations for low-income households in energy-inefficient homes. Some local authorities also offer grants or interest-free loans.
Are solar panels VAT-free?
Yes. Since April 2022, residential solar panel installations have attracted 0% VAT in the UK. This applies to both the panels and the installation labour, and is currently confirmed until March 2027. Battery storage systems installed alongside solar panels also qualify for 0% VAT.
What is the Smart Export Guarantee?
The Smart Export Guarantee (SEG) is a government-backed scheme requiring large energy suppliers (those with over 150,000 domestic customers) to offer a tariff for electricity exported to the grid from small-scale renewable generators. You need an MCS-certified installation and a smart meter. SEG rates typically range from 3p to 15p per kWh depending on the supplier and tariff type.
Can I get free solar panels in the UK?
The ECO4 scheme can fund free solar panel installations for households on qualifying benefits living in energy-inefficient homes (EPC rating D, E, F, or G). Some local authorities also run funded or subsidised schemes. Rent-a-roof schemes where a company installs panels for free and keeps the export payments still exist but offer poorer long-term value than owning the system yourself.
Is the Feed-in Tariff still available?
No. The Feed-in Tariff (FiT) closed to new applicants on 31 March 2019. If you already have a FiT contract, it continues for the full 20 or 25-year term. New installations now use the Smart Export Guarantee instead, which typically pays less per kWh but still provides useful income from exported electricity.
What happened to the Green Homes Grant?
The Green Homes Grant voucher scheme closed in March 2021 after running for just six months. It has not been replaced with a direct equivalent for homeowners who do not qualify for ECO4. The 0% VAT rate on energy-saving materials (including solar panels) was introduced partly to fill this gap.
How do I maximise my return on solar panels?
Self-consume as much of your solar electricity as possible - it saves you the full retail rate (around 24p/kWh) rather than the SEG export rate (3–15p/kWh). Run high-draw appliances during the day, consider a battery to store surplus for evening use, choose the best available SEG tariff, and make sure your installer claims the 0% VAT rate.
Do I need a smart meter for the Smart Export Guarantee?
Yes. You need a smart meter or an export meter that can measure how much electricity you send back to the grid. If you do not already have a smart meter, your energy supplier must install one free of charge. Some SEG tariffs require a half-hourly smart meter to access the best rates.
Written by James Carter, Less.co.uk energy specialist
Last updated: · Based on government publications and official scheme details · Methodology
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