VAT, the Smart Export Guarantee and payback
Residential solar installation is zero-rated for VAT at 0% until 31 March 2027, which reduces the upfront cost meaningfully on a typical installed system costing £5,000–£10,000 (Energy Saving Trust, July 2026). After that date the rate may change, so installations completed before then benefit from the current zero rating.
Once your system is running, any surplus electricity you export to the grid earns you payments under the Smart Export Guarantee (SEG). Electricity suppliers with at least 150,000 domestic customers must offer an SEG tariff; the rate is supplier-set and must be above zero, but rates vary widely between suppliers, so comparing SEG tariffs before you finalise your installer contract pays off. Your installation must be certified under MCS (Microgeneration Certification Scheme) or an equivalent scheme to qualify.
Payback on a well-sited system is typically 9–12 years (Energy Saving Trust, July 2026 fuel prices, ideal roof). An east-facing or shaded roof will take longer. Over a panel lifetime of 20–25 years, a system that pays back in that range still generates years of near-free electricity, but the numbers depend on your consumption, your tariff, your roof and how SEG rates move over time.