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Solar Energy UK welcomes the government’s announcement on VAT cuts on energy saving devices to zero

Chancellor Rishi Sunak announced today during the Spring Statement 2022, they’re cutting VAT on installing energy-saving materials in residential properties from 5% to 0% from 1 April 2022 until 31 March 2027 – a call Solar Energy UK has been making for years. 

Chris Hewett, Solar Energy UK’s Chief Executive stated: “Solar Energy UK is delighted to see VAT reduced on solar and other energy saving materials for residential use, after many years of calling for this. It is common sense for the Treasury to be encouraging greater uptake of all zero carbon technologies in the face of an energy security crisis and climate emergency. It will be seen as a real endorsement of solar, as well as improving the pay back for many consumers who may be on the fence.” 

Reducing the VAT rate on energy-saving materials and installation will help families cut their energy costs permanently and afford improvements towards decarbonising their homes. 

For the next five years, homeowners having energy-saving materials like solar panels, heat pumps, or insulation installed will pay zero VAT. This will allow for more affordable technologies to increase greener household energy performance.

The Spring Statement highlights: “To help households improve energy efficiency and keep energy costs down – as well as supporting the UK’s long-term Net Zero ambitions – the government is extending the VAT relief available for the installation of energy saving materials (ESMs).  

Taking advantage of Brexit freedoms, the government will include additional technologies and remove the complex eligibility conditions, reversing a Court of Justice of the European Union ruling that unnecessarily restricted the application of the relief. The government will also increase the relief further by introducing a time-limited zero rate for the installation of ESMs. A typical family having rooftop solar panels installed will save more than £1,000 in total on installation, and then £300 annually on their energy bills”. 

Solar Energy recently published a briefing on the energy price crisis that sets out several immediate and longer-term recommendations.

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