The UK government has eliminated the 20% VAT for retrofitted battery energy storage systems (BESS), effective from February 1, 2023.
Initially, BESS enjoyed VAT exemption when installed with other energy-saving materials like solar, as stated in the Spring Statement of 2022.
However, the recent government announcement on December 11 extended the tax exemption to retrofitted BESS as well. Industry members, including the Association for Renewable Energy & Clean Technology (REA) and Solar Energy UK, advocated for this inclusion, which was not addressed in the initial Battery Strategy outlined in the preceding Autumn Statement of November 26.

Following a consultation on VAT relief expansion for energy-saving materials, the government acknowledged that retrofitted electrical battery storage aligns with the objectives for VAT relief, qualifying it for exemption when installed independently or retrofitted to qualifying energy-saving materials. Dr. Nina Skorupska CBE, CEO of the REA, praised the extension for finally aligning battery storage with other energy-saving materials, suggesting that the government should further extend the VAT exemption to include thermal storage and electric vehicle (EV) chargepoints.