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Author Topic: PV and batteries at 5% VAT  (Read 714 times)
M
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« on: September 21, 2017, 04:38:07 PM »

Question, probably for the PV installers, but about battery installs.

The 'rules' say that a battery installed alongside a PV install is 5% VAT, but installed alongside an existing PV install are 20% VAT:-

Residential storage secures tax break when sold with solar panels

Quote
Residential battery storage has won a partial victory after the government agreed to a tax break for battery systems, but only if they are supplied and installed alongside solar panels.

The Solar Trade Association (STA) today (3 August 2017) announced that it has secured a 5% rate of VAT on battery storage instead of the standard 20% currently applied. However, in order for HMRC to allow the lower rate to apply the battery has to be sold and installed alongside solar, which already benefits from the lower rate.

In a notification to the STA seen by Solar Power Portal, HMRC explained that the scope of the reduced rate set out in the VAT Act 1994 is “very tightly drawn” and that it could only be extended to storage if “there is a single indivisible supply of a battery for the storage of power generated from the solar panels”.

“This is on the understanding the battery is linked to the solar panels and ancillary to the supply of the solar panels. We would expect the aim to be one of maximising use of on-site solar power consumption,” the note states.

It adds that if batteries are sold separately and retrofitted to existing solar systems, this would be seen as a “standard rated supply” and therefore does not qualify for the tax break.

Now, chatting on the MSE site, a PV'er is having a small 2 panel + inverter 'system' added so as to get the 5% VAT rate on the batt.

And another is having a PV extension added, wants a batt, but will have to wait due to the cost. But, I've had a thought, what does 'installed alongside PV' mean? Could they deliberately leave one panel out of the extension, then when ready to install a batt, buy and have that panel installed at the same time? Or do you think sold alongside solar, assumes a solar system:-  PV + inverter + wiring?

Not looking for anything dodgy here, just wondering what the legitimate wiggle room might be, since 15% extra VAT could be £500 to a £1,000!

Thanks.

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Just call me Mart.     Cardiff: 5.58kWp PV - (3.58kWp SE3500 + 2kWp SE2200 WNW)
RIT
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« Reply #1 on: September 21, 2017, 05:22:33 PM »

In the VAT notice it states the following

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2.9 Solar panels

Solar panels include all systems that are installed in, or on the site of, a building and that are:

    solar collectors such as evacuated tube or flat plate systems, together with associated pipework and equipment, such as circulation systems, pump, storage cylinder, control panel and heat exchanger; or
    photovoltaic (PV) panels with cabling, control panel and AC/DC inverter

    https://www.gov.uk/government/publications/vat-notice-7086-energy-saving-materials/vat-notice-7086-energy-saving-materials

So far there does not seem to be an update that includes battery storage or much detail that covers the statements from HMRC about the 5% rate applying on battery storage when installing with NEW solar PV systems.
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DaveF
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« Reply #2 on: October 10, 2017, 05:13:34 PM »

I had asked an installer about a battery system an he said that the inverter or anything on the DC side of the inverter would qualify for 5% and that's how they looked at this problem.

Kind Regards,

DaveF
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RIT
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« Reply #3 on: October 11, 2017, 12:34:48 AM »

I had asked an installer about a battery system an he said that the inverter or anything on the DC side of the inverter would qualify for 5% and that's how they looked at this problem.

Kind Regards,

DaveF

I guess that means just shopping around installers as each one will have an understanding of different solutions. I'm sure one that is focussed on selling Tesla AC side Powerwall's will say that there is no issue with an AC side solution.

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Why bother? - well, there is no planet B
M
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« Reply #4 on: October 11, 2017, 07:21:09 AM »

I had asked an installer about a battery system an he said that the inverter or anything on the DC side of the inverter would qualify for 5% and that's how they looked at this problem.

Kind Regards,

DaveF

Hiya Dave, did you see the post on the MSE site where a Powerwall II buyer is having a 2 panel with small inverter system installed, which is paid for by the 15% VAT saving on the batt. Sneaky!
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Just call me Mart.     Cardiff: 5.58kWp PV - (3.58kWp SE3500 + 2kWp SE2200 WNW)
djh
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« Reply #5 on: October 11, 2017, 03:25:07 PM »

I had asked an installer about a battery system an he said that the inverter or anything on the DC side of the inverter would qualify for 5% and that's how they looked at this problem.

There is no 'DC side' on a system with microinverters, so I suspect there's something wrong there, but whether that's the installers view or the as-yet-unclarified actual rules, I have no idea.
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Cheers, Dave
dan_b
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« Reply #6 on: October 11, 2017, 03:43:38 PM »

I think in this instance, the VAT rules are (regrettably) clear - if it's a new renewable system and the battery is going in as part of that, it's 5%.  If it's being retrofitted to an existing renewable system, it's the full 20%.   

There's no definition in the VAT rules about whether the battery is AC or DC connected, I think that's just a distraction. I had a couple of quotes for battery installs to be added to my existing PV before I got my PowerVault and they all said it would be 20% VAT and that if anyone said it could be at 5% (to lower the install price and therefore get the business), then it'll be on dodgy ground and they'd likely get caught eventually.

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