Selling solar power in the UK: Smart Export Guarantee and 0% VAT explained

In Great Britain you are paid for surplus solar electricity through the Smart Export Guarantee (SEG), and until March 2027 installation in homes is zero-rated for VAT. Here is how both work, and why the value of your system now depends mostly on how much of the electricity you use yourself.

How the Smart Export Guarantee works

The SEG replaced the old Feed-in Tariff for new installations. Its rules are set by Ofgem ¹:

• It applies to installations in Great Britain using solar PV, wind, hydro, anaerobic digestion or micro-CHP, up to 5 MW (50 kW for micro-CHP).
• SEG tariff rates must always be above zero. Beyond that, each supplier sets its own rate and contract terms.
• Payments are based on metered exports.

The Energy Saving Trust adds the practical conditions ²:

• all licensed energy companies with 150,000 or more customers must offer at least one SEG tariff;
• the technology and installer must be MCS-certified (or equivalent);
• you need a registered smart meter that records exported electricity.

Because there is no set rate, tariffs vary widely – from a few pence per kWh to time-of-use export tariffs that pay more at peak times. You don’t have to take the SEG tariff from your import supplier; the Energy Saving Trust recommends comparing several SEG suppliers and points to Solar Energy UK’s league table of SEG tariffs ². Some of the best export rates are only available if you also buy your electricity from the same supplier, so compare the combined deal.

Self-consumption is worth more than export

A unit you use yourself saves you the full import price, while an exported unit earns only the SEG rate. In most homes, raising self-consumption does more for payback than chasing the best export tariff:

• Run appliances in daylight – washing machine, dishwasher, immersion heater diverter.
• Charge your EV on surplus solar; see EV chargers that charge on solar surplus.
• Heat pump: running it in the afternoon can soak up surplus; see our heat pumps.
• Home battery: stores daytime surplus for the evening – and some tariffs let you charge cheaply overnight too. Check the numbers carefully; see our home batteries.
• East–west roofs produce somewhat less than south-facing ones (the Energy Saving Trust estimates 15–20% less) ³, but spread generation across the day, which can help self-consumption.

0% VAT on solar panels – until 31 March 2027

The installation of energy-saving materials, including solar panels, in eligible residential buildings is zero-rated for VAT until 31 March 2027 ⁴. The zero rate has applied since 1 April 2022 in England, Scotland and Wales, and since 1 May 2023 in Northern Ireland ⁴. From 1 April 2027 the reduced rate of 5% applies ⁴.

What that means in practice:

• The relief applies to supply and installation together. Panels bought on their own for DIY fitting are not covered by it.
• If you are planning a system for early 2027, ask your installer in writing which VAT rate their quote assumes if the work or invoice slips past 31 March 2027.
• A 5% rate is still far below the standard 20%, so the change is a nudge rather than a cliff edge.

Planning and other rules

According to the Energy Saving Trust, solar panels on houses are usually permitted development and don’t need planning permission, except for listed buildings, conservation areas and national parks ³. For flats, check with the freeholder and local planning authority. Your installer should notify the network operator before connecting.

Is solar still worth it?

The Energy Saving Trust puts the average home system at around 4.5 kWp and says panels should last 25 years or more, with the inverter usually replaced after about 12 years ³. Your payback depends on:

Compare panels on measured values in our solar panel database.