Solar panels for care homes: 0% VAT, batteries and heat pumps for homes that never close

Why solar panels suit care homes: 24/7 loads and daytime peaks

Most commercial solar business cases wrestle with the same problem: the building is empty when the sun shines. A care home doesn't have that problem. Residents are there all day, every day, including weekends and bank holidays, and the biggest electrical loads run in daylight:

• Laundry: washers, dryers and ironers run through the day, every day.
• Kitchens: cooking, dishwashing and cold storage for three meals and snacks.
• Lifts, hoists and call systems, plus lighting in corridors and communal rooms.
• Hot water: if it's heated by electricity or a heat pump, solar can feed it directly.
• Cooling: if you cool lounges or bedrooms in hot weather, that load peaks exactly when solar output does.

Because a home uses so much of its own daytime output, less goes to export at low rates and more replaces electricity you'd otherwise buy. That's what makes the payback. A good installer will prove it on your half-hourly data rather than an assumption.

Care home solar: key facts for 2026

0% VAT for care homes: what the law actually says

This is the point that changes the numbers. The zero rate for energy-saving materials applies to installations in residential accommodation, and the law's definition is wider than houses and flats. It includes a building used for a "relevant residential purpose", which covers:

"a home or other institution providing residential accommodation with personal care for persons in need of personal care by reason of old age, disablement, past or present dependence on alcohol or drugs or past or present mental disorder" (VAT Act 1994, Schedule 7A Group 1 Note 7, applied by Schedule 8 Group 23)

HMRC's VAT Notice 708/6 puts it simply: residential accommodation includes "homes providing care for the elderly, disabled people, or people who suffer or have suffered from drug or alcohol dependency or mental disorder", and hospices. HMRC's construction notice explains that personal care means "assistance with washing, eating and so on", and can include medical treatment needed to contain a condition or help rehabilitation.

The zero rate covers solar panels, air, ground and water source heat pumps, batteries (from 1 February 2024) and other listed energy-saving materials, when your installer supplies and fits them. From 1 April 2027 the rate goes back to the 5% reduced rate. The law also covers "part of a building", so a mixed site, such as a care home with a separate day centre, may need the installation split. Confirm the VAT treatment with your installer and accountant before you sign.

Solar and battery storage: evening loads and power cuts

A care home's evening is busy: dinner, medication rounds, laundry catching up, lights and TVs in every room. A battery stores midday surplus for that evening load, so more of the solar output is used on site. In a qualifying care home, a battery is zero-rated for VAT too, whether it's fitted with the panels or added later.

Will solar keep the lights on in a power cut?

Not by itself. A standard grid-connected solar system is designed to switch off when the grid goes down, so it can't push power onto cables that engineers may be working on. To keep chosen circuits running during an outage you need a battery system specifically designed and installed for backup, with a changeover arrangement. Talk this through with the installer:

• Which circuits matter: call bells, emergency lighting, medication fridges, pressure mattresses and IT. Backup capacity is limited, so choose essential loads.
• How long it lasts: a battery covers a short outage, not a long one. Keep your generator or generator-hire plan for extended cuts.
• Your business continuity plan: record what the system can and can't do, and test it.

Keep it maintained. Regulation 15 of the Regulated Activities Regulations requires care providers' premises and equipment to be suitable and properly maintained. Solar, batteries and heat pumps become part of your premises, so build an annual service and inspection contract into the quote. See commercial battery storage for sizing.

Heat pumps for care homes: hot water, legionella and scald safety

Heating and hot water are where many care homes burn the most gas or oil. A heat pump suits continuous occupancy: steady demand lets it run efficiently. But care homes have hot water rules that a designer must work to from day one. HSE guidance for health and social care sets out:

The grant, and its limits

The Boiler Upgrade Scheme isn't just for homes. It pays £7,500 towards an air or ground source heat pump in a small non-domestic building, for systems up to 45kWth (70kWth with more than one heat pump). Until March 2027, a building heated by oil or LPG with no mains gas connection can get an extra £1,500, so £9,000 in total. The scheme now runs to 2030. A smaller care home may fit within those limits, especially with two or more units in a cascade, which also gives you a backup if one unit fails. A larger home or a care village will usually be above them: see commercial heat pumps for sizing and industrial heat pumps for very large systems.

Fitting a heat pump adds electrical load, which makes solar on the roof work harder for you. Do them together and the 0% VAT applies to both, until 31 March 2027.

Care home solar panel costs and energy costs

Illustrative figures multiply the DESNZ cost per kW by system size and are rounded. DESNZ's figures include VAT where it applied, so a zero-rated care home installation may come in lower. They exclude batteries and roof repairs. DESNZ measures cost per kW of declared net capacity (DNC). Installers usually quote per kWp of panels, and DESNZ says costs on that basis (total installed capacity) are typically 6-12% lower: the 10-50kW median is £1,204/kWp. Source: DESNZ solar PV cost data, published 28 May 2026.

Cutting care home energy costs beyond solar

• Lighting: corridors and communal areas are lit around the clock. LED with sensors is usually the quickest win: see commercial LED lighting.
• Controls: zoned heating and time controls stop empty rooms being heated.
• Laundry: schedule big loads for the middle of the day, when solar output peaks.
• Insulation and glazing: fabric work cuts the size, and cost, of any heat pump you fit later.
• Export: The Smart Export Guarantee pays for solar you export, on systems up to 5MW in Great Britain. Suppliers set their own rates; the law only says the rate must be above zero, so shop around.

Tax allowances and business rates for care home operators

Capital allowances. Plant and machinery in a dwelling-house can't get allowances in a property business, but HMRC's manual is clear that "a nursing home, a residential care home" is not a dwelling-house. So an operator trading from the home can claim in the usual way:

HMRC's manual is explicit: "all capital expenditure on the provision of solar panels is specifically designated as special rate" (CA22335). So the AIA is the big lever. A company spending £150,000 on a rooftop system can usually deduct the whole lot from that year's profits, as long as the AIA hasn't been used up on other kit.

A heat pump is treated differently from solar: HMRC lists "a space or water heating system" as an integral feature, which is also special-rate plant, and the Annual Investment Allowance can cover it. Charitable care providers usually don't pay corporation tax, so allowances matter less to them than the VAT saving.

Business rates: In England, plant and machinery used to generate or store power from on-site renewables (solar included, and batteries where the power stored is mainly or exclusively renewable) is excluded from rateable value until 1 April 2035. Wales (from 1 April 2024) and Scotland (from 1 April 2023) have equivalent exemptions running to 2035. Adding panels to your roof shouldn't raise your rates bill. Heating plant is treated separately and wasn't changed, so don't assume a heat pump is rates-free.

EV charging for staff: The Workplace Charging Scheme pays up to £500 per socket (it went up from £350 on 1 April 2026), capped at 75% of costs, for up to 40 sockets across all your sites. That's up to £20,000. Funding runs until 31 March 2027, its final year. A care company's chargepoints must be for staff or fleet, but a charity can let visitors use them too. See Workplace Charging Scheme.

Roofs, planning and installing around residents

• Planning: Most roof-mounted commercial solar in England is permitted development (the old 1MW cap was removed in December 2023), but bigger non-microgeneration systems need prior approval on glare, and listed buildings always need consent. Many care homes are converted period houses, sometimes listed or in conservation areas, so check early. Rear roof slopes and outbuildings are often easier.
• Roof condition and structure: a structural check confirms the roof can take the panels. Fix any roof repairs first.
• Fire strategy and insurance: tell your insurer before installation, and agree where inverters, batteries and DC isolators go. Agree a suitable location for any battery with your fire risk assessor.
• Residents first: agree working hours, noise limits, scaffold security and access routes that keep residents and visitors safe. Contractors should be briefed on your safeguarding and infection-control rules.
• Power continuity during the work: the switchover needs a short planned shutdown. Schedule it with care staff and keep essential equipment on backup.
• Grid approval: larger systems need approval from the distribution network operator (DNO), which can take weeks or months.

How to get your care home quoted

Before you ask for quotes

• Twelve months of electricity and gas or oil bills, or half-hourly data from your supplier.
• How the home is heated now, and how hot water is produced and stored.
• Who owns the building: the operator, a landlord or a property company. Landlord consent may be needed.
• Your VAT position: are you VAT-registered, and is the whole building residential care?
• Any planned extension, refurbishment or roof work.

Questions to ask every installer

• How much of the output will the home use on site, month by month?
• Will you apply the 0% VAT rate, and what do you need from us to confirm the building qualifies?
• What does a battery add, and can it back up essential circuits in a power cut?
• Are you MCS certified (needed for the Smart Export Guarantee on systems up to 50kW, and for the heat pump grant)?
• How will you manage the work around residents?
• What maintenance and monitoring come with the system?

We pass your enquiry to one suitable installer. Running a charity home? See charity solar panel grants. Hospitality operator too? See hotel solar panels.