Do Nursing Homes Pay VAT on Solar Panels? (2026)

Short answer: no — not until 31 March 2027. Solar panels installed in a nursing home are zero-rated for VAT, and so are batteries for storing energy. It surprises operators because almost every other commercial building pays the standard 20% rate on solar, and a lot of installer marketing still says so. The reason care homes are different sits in one HMRC notice, and it is worth knowing precisely, because the relief has an end date and a couple of conditions.

Why a nursing home counts as residential accommodation

The relief is set out in HMRC’s VAT Notice 708/6, Energy-saving materials and heating equipment. It applies to installations of energy-saving materials in residential accommodation, and section 2.21 lists what that includes. Alongside houses and blocks of flats, the list names:

• homes providing care for the elderly, disabled people, or people who suffer or have suffered from drug or alcohol dependency or mental disorder;
• hospices;
• children’s homes; and
• institutions that are the sole or main residence of at least 90% of their residents.

A nursing home providing care for older people falls squarely within the first item. So does a residential care home, a dementia care home and a hospice. The relief is not a special concession for care — it follows from how the building is used.

Solar panels and batteries are listed materials

Section 2.7 of the notice lists the energy-saving materials the zero rate covers. Solar panels are on the original list. From 1 February 2024, the list was extended to include batteries for storing energy converted from electricity, along with water source heat pumps and smart diverters. A solar array with battery storage installed in a nursing home is therefore zero-rated as a whole installation.

The dates that matter

The notice gives the window exactly: the zero rate applies to installations of energy-saving materials supplied between 1 May 2023 and 31 March 2027. From 1 April 2027, supplies revert to the reduced rate of 5%.

For a project being planned now, that makes 31 March 2027 a real programme date. A feasibility study, a board decision, a planning check and a grid application can easily take six months before anyone is on the roof, so a project that starts its paperwork in the autumn of 2026 has less slack than it looks.

The catches

Three points trip people up:

1. The relief is on the installation. It applies to energy-saving materials supplied and installed — buying panels to fit yourself does not attract the zero rate. Ask for the rate to be shown on the quote and the invoice.
2. It has to be the care home building. The residential accommodation test is about the building the materials are installed in. If the array is on a separate building on the site, check how that building is used before assuming the relief applies.
3. VAT is not the same as capital allowances. The zero rate reduces the price. Capital allowances reduce tax on profits, and solar panels are special-rate plant with their own rules — full expensing does not apply. Our guide to capital allowances for care home solar sets those out.

What it is worth

The saving is simply the VAT you would otherwise have paid: on an installation quoted at a given price before VAT, the difference between 20% and 0% is a fifth of that price. For a charity-run home or an operator that cannot use capital allowances because it is not paying tax on profits, the zero rate may be the whole of the tax benefit of the project — which is one reason the timing deserves attention.

VAT is only one of the questions that decide a nursing home project. The others — the fire risk assessment and your insurer, what solar does and does not do in a power cut, and whether the roof needs planning consent — are covered in our guide to solar panels for nursing homes.

Source: HMRC, VAT Notice 708/6 — Energy-saving materials and heating equipment, sections 2.1, 2.7 and 2.21 (checked September 2026). This article is independent guidance, not tax advice; confirm the treatment of a specific project with your adviser.