Salary sacrifice solar could slash bills by 50%

The average UK household spends £1,800 a year on electricity and gas. A new salary sacrifice scheme from Heva Energy promises to cut that by half, without the upfront cost of solar panels.

As reported by Solar Power Portal, Heva Energy’s scheme lets employees pay for solar panels through pre-tax salary deductions. The employer deducts the cost from gross pay, reducing both income tax and National Insurance contributions. For a basic-rate taxpayer, that’s an effective 32% discount on the system price.

How the scheme works

Employees sign up via their employer. The salary sacrifice agreement runs for a fixed term, typically three to five years, after which the employee owns the panels outright. Heva Energy manages installation, maintenance, and monitoring. The company claims the average 4 kW system, costing around £7,000, can generate 3,400 kWh per year, enough to cover half a typical 3-bed semi’s electricity use.

But the catch is employer participation. The scheme only works if the employer agrees to administer salary sacrifice. Small businesses with fewer than 10 staff may find the administrative burden too high. Heva Energy says it targets medium-sized firms with 50–500 employees, where payroll teams can handle the deductions.

Who qualifies, and who doesn’t

To qualify, you need a suitable roof: south-facing, east-west, or flat with minimal shading. The Energy Saving Trust estimates that 60% of UK homes have a viable roof for solar. Renters and flat-owners are excluded unless their landlord agrees, unlikely given the long-term commitment.

Salary sacrifice also reduces your take-home pay, which can affect mortgage affordability checks. The Money Advice Service warns that lenders may view salary sacrifice as a reduction in disposable income. Anyone planning to remortgage within the scheme term should check with their lender first.

Ofgem does not regulate salary sacrifice schemes directly, but consumer protections under the Consumer Rights Act 2015 apply. Heva Energy says it uses MCS-certified installers, which is essential for eligibility under the Smart Export Guarantee (SEG). Without SEG, you cannot sell surplus power back to the grid, currently paying around 15p per kWh.

What it costs a typical 3-bed semi

Assume a £7,000 system paid via salary sacrifice over four years. A basic-rate taxpayer earning £30,000 would see monthly deductions of about £100, but net take-home pay falls by only £68 due to tax and NI savings. Over four years, that’s £3,264 in lost take-home pay, effectively a 53% discount on the system.

Electricity savings depend on usage. A 3-bed semi using 3,000 kWh per year at 28p/kWh pays £840 annually. A 4 kW system generating 3,400 kWh could offset 80% of that, saving £672. But real-world generation is lower in winter; typical annual savings are closer to £450–£550.

Add SEG payments for exported power: at 15p/kWh for 50% of generation, that’s another £255 a year. Combined savings of £700–£800 would cover the net salary sacrifice cost within four years, then deliver free electricity for the system’s 25-year lifespan.

Yet the 50% bill cut claim assumes you use every kWh generated. Most households export some power. And if you have an electric vehicle or heat pump, your consumption is higher, so the percentage cut is smaller, though the absolute saving may be larger.

Households interested should first check if their employer offers the scheme. The next best option is the Great British Insulation Scheme for loft and cavity wall insulation, which can cut heating bills by £300 a year. For solar, the standard route remains a cash purchase or 0% VAT loan, available until March 2027 under the government’s energy efficiency package.