The UK government does not offer a direct grant for residential solar panel installation in 2026. The Feed-in Tariff closed in 2019 and has not been replaced. However, several indirect incentives collectively reduce the cost by thousands of pounds — and for certain households, fully funded installations remain possible through March 2026.

For businesses, the picture is even stronger: capital allowances effectively provide 25% off commercial solar costs, and the business rates exemption runs until 2035.

For Homeowners: Every Incentive Explained

0% VAT on Solar Panels (Expires March 2027)

The most valuable current incentive. Solar panel and battery installations on residential properties are zero-rated for VAT until 31 March 2027, at which point the rate reverts to 5%. On a typical £7,279 system, this saves approximately £1,456 compared to the standard 20% rate. The relief covers panels, batteries (installed alongside solar), inverters, and installation labour. No extension beyond March 2027 has been announced.

Smart Export Guarantee (SEG)

Energy suppliers with 150,000+ customers must offer a tariff paying you for surplus electricity exported to the grid. In 2024-25, suppliers collectively paid £56.97 million for 443 GWh of exports — an average of 13p/kWh. Approximately 270,395 solar installations were signed up to a SEG tariff by March 2025.

The best rates: Octopus Intelligent Flux averages 25-27p/kWh (requires battery and Octopus account), Good Energy Solar Savings Exclusive pays 25p/kWh, EDF Export and Earn V2 pays 24p/kWh. The floor is Scottish Power's non-customer rate at just 6p/kWh. The difference between worst and best can exceed £400/year — always compare tariffs before choosing.

ECO4 Scheme

The Energy Company Obligation scheme provided fully funded energy efficiency improvements for qualifying low-income households. ECO4 was backed by £4 billion and covered cavity wall insulation, loft insulation, boiler replacements, and in some cases solar panels — though solar accounted for just 5.75% of all measures delivered (38,005 of 660,487 installations).

ECO4 required an EPC rating of D or below and receipt of qualifying benefits (Universal Credit, Pension Credit, Child Tax Credit, Working Tax Credit, Income Support, JSA, ESA, or Housing Benefit), or household income below £31,000 via the LA Flex route. The government confirmed in November 2025 that ECO4 would not be extended, with the transition to the Warm Homes Plan taking its place.

Boiler Upgrade Scheme (BUS)

The BUS provides £7,500 grants for air source and ground source heat pumps, plus £5,000 for biomass boilers in off-grid rural properties. New additions include £2,500 grants for air-to-air heat pumps (introduced late 2025). The scheme has been extended to at least 2030, with a 2025/26 budget of £295 million. Over 100,000 applications have been received and over £485 million paid out since launch.

While BUS does not directly fund solar panels, homeowners pairing solar with a heat pump can combine both investments. The BUS grant is not means-tested and is available in England and Wales only.

Home Energy Scotland

Important change: Home Energy Scotland stopped funding standalone solar PV on 6 June 2024. Only solar thermal panels and PV-T hybrid systems remain eligible for interest-free loans of up to £5,000. Heat pumps still qualify for up to £15,000 (£7,500 grant + £7,500 loan). Scottish residents can access support through scotlandheatpumpgrants.co.uk.

Welsh Grants — Warm Homes Programme

The Warm Homes Nest scheme has transitioned into the Warm Homes Programme (running to April 2031), which can include free solar PV and battery storage for eligible low-income Welsh households. Solar PV made up 18.3% of measures installed under the previous scheme. The Green Homes Wales scheme offers interest-free loans of up to £25,000, though the 2025/26 budget of £3 million limits coverage to approximately 120 households.

For Businesses: Tax Incentives

Annual Investment Allowance (100% First-Year Relief)

The most valuable business incentive. Solar PV qualifies for 100% Annual Investment Allowance, allowing businesses to deduct the full cost from taxable profits in the year of purchase — up to £1 million. At 25% corporation tax, a £100,000 commercial solar installation effectively costs £75,000 after relief.

Business Rates Exemption (Until 2035)

Rooftop solar benefits from a 100% business rates exemption from April 2023 to 2035. This covers rooftop solar, carports, building-integrated systems, and on-site battery storage. This was a landmark policy change — prior to 2023, solar panels were rateable, deterring many installations.

Business-Specific Solar Grants

Various local and regional grants exist for business solar. Salix Finance provides interest-free loans for public sector organisations including schools. Local Enterprise Partnerships sometimes offer capital grants. Visit solarpanelgrantsforbusinesses.co.uk for the latest available schemes in your area.

How to Maximise Your Incentives

Install before 31 March 2027 to benefit from 0% VAT. Choose an MCS-certified installer (required for SEG eligibility and all government schemes). Compare SEG tariffs — the difference between worst and best can exceed £400/year. If on benefits or low income, check remaining grant eligibility before paying for installation. For businesses, consult your accountant about AIA timing to maximise the first-year deduction. Consider adding battery storage at the same time as solar — the marginal cost is much lower than retrofitting later.

For full details on what solar costs before incentives, see our solar panel costs UK 2026 guide. For commercial-specific pricing, see our commercial solar costs guide.