As the UK moves steadily towards its net zero goals, installing solar panels remains one of the best ways for homeowners and businesses to reduce their energy bills and carbon footprint. However, the initial cost of solar panels can be significant. Thankfully, several government grants, schemes and funding options are available in 2025 to help ease the solar panel financial burden.
On this page
Here’s a thorough review of everything currently on offer for UK homes and businesses.
| Scheme | Applies to | Benefit | Notes |
|---|---|---|---|
| Smart Export Guarantee (SEG) | Homes and businesses | Ongoing payments for exported electricity | System must be installed by MCS-certified installer |
| ECO4 scheme | Low-income households | Full or partial funding for solar panels | Focus on energy-inefficient properties |
| VAT reduction (0% VAT) | Residential properties | 5% saving on installation costs | Applies until 31 March 2027 |
| Boiler Upgrade Scheme (solar thermal only) | Homes and small businesses | £5,000 grant for heat pump (supports solar thermal) | Solar PV not directly funded |
| Local authority and regional schemes | Varies – often homeowners and SMEs | Subsidised installations, group discounts | Check availability in your local area |
| Business tax reliefs (Full expensing & AIA) | Businesses | Full tax deduction for solar investments | Substantially reduces upfront costs |
| Green grants (UKRI, Innovate UK) | Businesses and innovators | Grants for low-carbon technology projects | Highly competitive application process |
The Smart Export Guarantee (SEG)
What it is:
The Smart Export Guarantee (SEG) is a government-backed initiative requiring certain energy suppliers to pay small-scale generators (like homes and businesses with solar panels) for the electricity they export to the National Grid.
Who qualifies:
- Homes and businesses with solar PV systems up to 5MW in size
- Systems must be installed by an MCS-certified installer
- You need a smart meter capable of half-hourly readings
Funding benefit:
- Payments vary by supplier but typically range from 2p to 20p per kWh exported
- It provides an ongoing income rather than upfront funding
The ECO4 scheme (Energy Company Obligation)
What it is:
The ECO4 scheme, running until March 2026, is primarily aimed at supporting low-income households to install energy efficiency measures, including solar panels in some cases.
Who qualifies:
- Households receiving certain benefits (e.g., Universal Credit, Pension Credit)
- Households living in energy-inefficient properties (band D or lower EPC rating)
Funding benefit:
- Full or partial funding towards the cost of solar panel installation
- Often delivered via big energy suppliers partnering with local installers
Important note:
Solar funding under ECO4 is less common than insulation or heating upgrades but is growing steadily.
VAT reduction on solar panels
What it is:
From April 2022, the government introduced a zero-rate VAT policy on the installation of energy-saving materials, including solar panels, for residential properties.
Who qualifies:
- Homeowners (including landlords)
- Residential property owners installing solar panels
Funding benefit:
- VAT on solar panel installations is 0% until 31 March 2027
- This equates to a saving of 5% compared to the previous reduced VAT rate
Boiler Upgrade Scheme (for solar thermal)
What it is:
The Boiler Upgrade Scheme (BUS) primarily funds heat pumps, but solar thermal systems (not solar PV) are eligible if combined with a heat pump installation.
Who qualifies:
- Owners of homes or small non-domestic properties
- Properties located in England and Wales
Funding benefit:
- £5,000 grant towards an air source heat pump (which may be supported by solar thermal)
- Solar PV panels are not funded directly, but solar thermal can benefit if part of a larger upgrade
Local authority and regional schemes
What it is:
Many councils and regional authorities run their own solar panel initiatives, sometimes offering grants, discounts, or group-buying schemes (like “Solar Together”).
Who qualifies:
- Depends on the scheme; often open to all homeowners or sometimes focused on certain income groups
- Small businesses may also qualify under some local initiatives
Funding benefit:
- Subsidised solar panel installations
- Group discounts through bulk purchasing programmes
Examples in 2025:
- Solar Together is active in multiple counties, offering bulk-buy discounts
- Some devolved governments (e.g., the Scottish Government) offer additional loans or grant support via Home Energy Scotland
Business-specific funding and tax reliefs
What it is:
Businesses investing in solar panels can take advantage of several tax reliefs and funding opportunities.
Available options:
- Full expensing: Businesses can now deduct the full cost of qualifying solar equipment from their profits (replacing the old super-deduction scheme).
- Annual Investment Allowance (AIA): Provides up to £1 million of tax relief each year for qualifying capital investments, including solar PV systems.
- Green grants and funding competitions: Various UKRI and Innovate UK grants support businesses adopting low-carbon technologies.
Funding benefit:
- Significant tax savings
- Potential access to innovation grants if using solar in new and creative ways
No direct national grants for standard solar panels in 2025
It’s important to be aware that, as of 2025, there is no direct national government grant solely for buying and installing standard residential or business solar PV systems (like there once was with the now-closed Feed-in Tariff).
Most financial support now focuses on:
- Export payments (via SEG)
- Reducing costs (like VAT exemptions)
- Regional/local council schemes
- Targeted help for low-income households or businesses investing in broader energy efficiency
Conclusion – Solar panel grants schemes
While direct cash grants for solar panels have largely disappeared, a range of financial incentives still exist to make solar energy much more affordable for UK homes and businesses in 2025. Whether you qualify for the Smart Export Guarantee, can benefit from zero VAT, or take advantage of regional schemes, installing solar panels is more financially attractive now than it has been in years.
Always check with your local council, your chosen installer, and trusted national sources before proceeding, as new schemes are frequently launched to support the UK’s ongoing energy transition.