UK 0% VAT for ESMs

Summary:

This article explains how to configure automated VAT calculations for UK-based projects in OpenSolar, following updated UK government regulations for Energy Saving Materials (ESMs). By adjusting your pricing scheme settings in OpenSolar, you can ensure VAT is automatically calculated based on the type of components in the system. Systems with ESMs like solar panels qualify for 0% VAT, while battery-only systems are subject to 20% VAT. Manual price entries require special attention to VAT override settings.

🔗 Read the official VAT regulation changes (UK Gov)

Automated VAT Configuration for UK Projects:

Recent changes in UK VAT legislation for Energy Saving Materials (ESMs) such as solar panels affect how tax should be calculated for solar installations. OpenSolar offers built-in support to automate VAT application based on these rules.

Step 1: Update the Tax Settings in Your Pricing Scheme:

1. Navigate to:
   Control > Pricing & Payments > Pricing Schemes

2. Click Edit on the relevant pricing scheme.

3. Update the following settings:

   • Tax Settings: Set to "Tax included" at 0%

   • Including/Excluding Tax: Set to "Excluding tax"

This ensures that VAT is not included in base pricing but is instead dynamically applied based on system eligibility.

Step 2: How VAT Is Automatically Determined:

When this pricing scheme is used in a UK project, OpenSolar will apply VAT as follows:

• 0% VAT is applied if the system includes qualifying ESMs, such as solar PV modules.

• 20% VAT is applied if the system does not include solar modules — for example, battery-only systems.

 System Check Logic: If the platform detects the total cost of modules = 0, it considers the system ineligible for 0% VAT and applies 20% instead.

Important Notes for Manual Pricing Schemes:

If a user selects a manual pricing scheme in:

• Design > Pricing tab
  and chooses:

• "Enter price manually ($)" or

• "Enter price manually ($/W)"

Then OpenSolar will default to 0% VAT.

 Override VAT if Incorrect:

Use the "VAT override" fields at the bottom of the Pricing tab in Design to adjust VAT manually where applicable.