British government follows up ‘zero carbon’ fanfare with huge tax increase on renewables equipment

Published: 2019.07.24 14:58:21




Legislation to increase the rate of sales tax attached to solar panels and home batteries in the UK by 15% moved forward yesterday following a legislation committee hearing that included accusations of government errors and “bombast and windbaggery”.    

24th June, legislation was put forward containing the VAT (value-added tax) increase, which will see tax on home solar and battery storage systems ramped up from 5% to 20%.

While some exemptions will remain - housing associations, people over 60 and those on certain benefits will continue to pay the 5% rate - and the increased rate will not apply to labour costs, the industry has warned of the significant detrimental impact the rise could have on installations. 

When put to a vote, all nine Conservative members of the committee voted to progress the legislation, winning over the seven ‘noes’ and setting the scene for it to come into force from 1 October 2019. 

The Solar Trade Association lobbied several members of the legislation committee prior to the vote and Chris Hewett, the trade body’s chief executive, said that the need for government action to deliver on carbon targets “cannot be said loud enough”. 

“We are bitterly disappointed to see secondary legislation racing head that risks increasing VAT for homes seeking to install battery storage alongside solar panels. We urge a considered debate on this panel, slow reflection and a better policy proposal,” he said prior to the vote. 

The legislation was also attacked by the clean energy sector. Juliet Davenport, chief executive at green energy firm Good Energy, said that the proposed hike was “possible the worst way to respond to a climate emergency”.

“The government should be seeking to be a world leader in renewable technologies, but it’s damaging our successful solar industry and putting green jobs at risk. We urge the Treasury to listen to the thousands of petitioners who want to play their part in fighting climate change.”

Related news