Commercial Blog

Solar PV for Charities to Qualify for 0% VAT

Charlie McGibbon · 26 Jan 2024
  • Charities qualify for 0% VAT on solar PV installations for buildings used solely for charitable purposes, effective from February 1, 2024.
  • The building must be owned by the charity and primarily used for charitable purposes, with some flexibility (95% for charitable use) for places like church and village halls.
  • The VAT waiver also applies to battery installations, allowing charities to retrofit batteries for their existing solar PV systems.
  • Solar energy can provide a 20% upfront cost reduction for charities, leading to significant long-term savings that can be reinvested in charitable projects. Commercial payback periods are typically 3-5 years, further reduced for charities with VAT relief.

Buried by the headline announcement of 0% VAT on battery only domestic installations came a welcome bit of news for charities looking to invest in solar to reduce their energy bills, that is the announcement that charities now qualify for 0% VAT on solar panel installations where the building in question is used solely for charitable purposes. This will come into effect from the 1st February 2024.

This means that not only must the building be owned by the charity but it must be used solely for charitable purposes. There is a bit of leeway here, for example church and village halls that can be rented out but are still owned by the charity, this was already written into VAT rules that there is leeway of 5% in the term "solely", so as long as the building is used 95% for charitable purposes, the VAT waiver still applies. This expands the definition to include places like village and church halls that can occasionally be rented out, so long as the primary use is a charitable one.

The announcement also covers battery installations, so if your charity already has solar PV installed and would like to take advantage of this change to retrofit a battery, now is a very good time to get in contact.

Are Solar Panels a Good Investment for a Charity?

Getting 20% off the upfront cost of solar energy for decades to come makes commercial sense, and at Spirit we're ready and willing to take registered charities through all stages of the process. We appreciate solar does generally require a significant upfront cost, which may be difficult for a charitable organisation, but it will save your charity cash in the long term, cash which can be used to fund front line projects and services. With payback periods for commercial generally a mere 3-5 years, reduced further for charities with the VAT relief, you will see the return on your investment sooner than you think.

Of course, the payback period is dependent on the nature of the charity and the use of the charitable building, for example a school or hospice is likely to have higher energy costs than a village or church hall. For example our installation at St. Peter's Hospice supplies 80% of electricity the building uses and rarely exports to the grid, reducing the payback period as it's nearly always more economical to cover your own electricity costs than sell back to the grid.

In our experience, if a charity owns a building, just the cost to keep the lights on can be significant, and solar is always worth exploring. Not to mention the fact that all organisations, but most especially charitable ones, ought to be concerned with environmental sustainability and climate change, with these issues having a knock on impact on so many other areas.

Get in contact with Spirit today by emailing or calling 0118 951 4490 for a chat with one of our friendly technical team on how solar can benefit your charity.