Solar Panel Grants & Incentives in 2026

0% VAT on Solar Panels (Until 2027)

Since April 2022, solar panels, battery storage, and other energy-saving measures installed in residential properties have been subject to 0% VAT (reduced from the previous 5% rate). This applies to both the equipment and installation labour.

For a typical 4kW system costing £6,500 before VAT, this saves approximately £325 compared to the old 5% rate, or £1,300 compared to the standard 20% VAT rate.

The 0% rate is currently guaranteed until 31 March 2027. After that, the government has not confirmed whether it will be extended or revert to 5%. If you are considering solar, this is a strong reason to act before the deadline.

ECO4 Scheme — Free Solar for Eligible Households

The Energy Company Obligation (ECO4) is a government scheme that requires large energy suppliers to fund energy efficiency improvements in lower-income households. Solar panels can be installed completely free under ECO4 if you meet the eligibility criteria.

Who Is Eligible for ECO4?

• You receive one of the qualifying benefits: Universal Credit, Pension Credit, Child Tax Credit, Income Support, ESA (income-related), JSA (income-related), Housing Benefit, or Warm Home Discount Core Group
• Your home has an EPC rating of D, E, F, or G
• You own your home (or are a private tenant with landlord consent)
• Social housing tenants may also be eligible through their housing provider

ECO4 runs until March 2026, with ECO+ (also known as the Great British Insulation Scheme) running alongside it for broader eligibility. Check with your energy supplier or a local ECO installer for availability in your area.

Home Upgrade Grant (HUG2)

The Home Upgrade Grant provides funding for energy efficiency improvements to off-gas-grid homes in England with an EPC rating of D, E, F, or G. Solar panels are an eligible measure, often combined with insulation or heat pumps.

Grants of up to £10,000 are available per household. The scheme is administered by local authorities, so availability varies by area. You must have a household income below £31,000 (or receive qualifying benefits) to be eligible.

Scotland — Home Energy Scotland Loans

Home Energy Scotland offers interest-free loans of up to £7,500 for solar panel installations, repayable over up to 10 years. This is available to all homeowners in Scotland, regardless of income.

Additionally, rural and island households can receive up to £1,250 cashback on top of the loan. The scheme also covers battery storage, heat pumps, and insulation. Apply through the Home Energy Scotland helpline or website.

Wales — Nest Scheme

The Welsh Government’s Nest scheme provides free energy efficiency improvements including solar panels to eligible households. You may qualify if you receive a means-tested benefit and your home has a poor energy rating. Nest is managed by British Gas on behalf of the Welsh Government.

What About “Free Solar Panel” Offers?

You may see adverts for “free solar panels” from private companies. These are typically rent-a-roof schemes where a company installs panels on your roof for free, but they keep the SEG payments and any generated electricity beyond what you use. You get cheaper daytime electricity but do not own the panels.

In most cases, buying your own system (even with a loan) is a better long-term investment. The only genuinely free solar panels come through government schemes like ECO4 for eligible households.