While the UK no longer offers a direct solar panel grant like the old Feed-in Tariff (which closed in 2019), there are still significant financial incentives that make solar panels an excellent investment. The combination of 0% VAT, the Smart Export Guarantee, and potential ECO4 funding means most homeowners can reduce costs substantially.
Here's every incentive available in 2026 and how to claim them.
1. 0% VAT on Solar Panels
Saving: ~£1,000-£1,500 on a typical system
Since April 2022, all residential solar panel installations are zero-rated for VAT. This applies automatically - you don't need to apply. Your installer simply doesn't charge VAT on the invoice.
What's covered
- Solar panels and inverters
- Battery storage systems
- Installation labour and materials
- Scaffolding for the installation
Eligibility
- Residential property (not commercial)
- Installed by a qualified contractor
- No application required - automatic
- Extended to at least March 2027
2. Smart Export Guarantee (SEG)
Earning: £150-£300/year from surplus energy
The Smart Export Guarantee pays you for every kWh of surplus solar electricity you export to the grid. Energy suppliers with 150,000+ customers are legally required to offer a SEG tariff. Rates vary from 3p to 15p per kWh - shop around for the best deal.
| Supplier | SEG Rate (p/kWh) | Type | Est. Annual Income* |
|---|---|---|---|
| Octopus Energy | 15p | Fixed | £270-£360 |
| EDF | 5.6p | Fixed | £100-£135 |
| British Gas | 5.1p | Fixed | £90-£120 |
| E.ON | 4.1p | Fixed | £75-£100 |
Requirements: To claim SEG you need an MCS-certified installation and a smart meter. You don't have to be on the same supplier for SEG as for your electricity supply - always compare SEG rates separately.
3. ECO4 Scheme (Free Solar for Eligible Households)
Potential saving: 100% of installation cost
The ECO4 scheme (Energy Company Obligation) requires large energy suppliers to fund energy efficiency measures for low-income and vulnerable households. Solar panels can be installed fully funded under this scheme for eligible homes.
Eligibility criteria
Benefits (one or more):
- • Universal Credit
- • Pension Credit (Guarantee)
- • Income-based JSA / ESA
- • Child Tax Credit (income < £16,480)
- • Housing Benefit
- • Warm Home Discount (Core Group)
Property requirements:
- • EPC rating D, E, F, or G
- • Must be owner-occupied or social housing
- • Suitable roof for solar installation
- • Insulation measures first (if applicable)
4. Local Authority Grants & Schemes
Some local councils and devolved governments offer additional solar incentives:
Solar Together (Group Buying)
Available in many English counties, Solar Together is a council-backed group buying scheme that uses collective purchasing power to negotiate discounted solar panel prices. Typical savings of 20% vs individual quotes.
Home Energy Scotland (HES) Loan
Scottish homeowners can apply for interest-free loans of up to £6,000 for solar panels and £6,000 for battery storage through Home Energy Scotland. Repayable over up to 10 years.
Nest Scheme (Wales)
Welsh households on means-tested benefits or living in energy-inefficient homes may qualify for free or subsidised solar panels through the Nest scheme. Administered by the Welsh Government.
5. Solar Incentives at a Glance
| Incentive | Value | Eligibility | Application | Status |
|---|---|---|---|---|
| 0% VAT | ~£1,000-£1,500 | All residential | Automatic | Active |
| Smart Export Guarantee | £150-£300/yr | MCS install + smart meter | Apply to supplier | Active |
| ECO4 Scheme | Up to 100% | Low-income + EPC D-G | Via energy supplier | Active |
| Solar Together | ~20% saving | Participating council areas | Register via council | Regional |
| HES Loan (Scotland) | £6,000 0% loan | Scottish homeowners | Apply online | Scotland |