THE CHANCELLOR of the Exchequer, Rishi Sunak, announced that he will be scrapping 5% VAT for ‘homeowners who have solar panels, heat pumps and insulation installed’ – “they will pay zero”. These changes will come into effect April 2022 and last for five years, until 2027.
Mr Sunak claims that families who have solar panels installed could see tax savings worth around £1,000.
“Installing solar panels is going to save you tens of thousands of pounds anyway on energy bills, but to see the government support green energy like this is great! It’s going to help people save even more money, in what are, undeniably, financially burdening times.” says David Draper (Solar Fast).
This comes as solar industry experts and bodies have been calling for the government to take more positive action against rising costs of energy.On the 18th March 2022, Solar Energy UK, which is the UK’s leading solar trade association, wrote to Rishi Sunak, requesting that VAT be reduced for renewable and energy efficiency technologies, with Chris Hewett stating:
“The solar industry welcomed the Government’s recent call to accelerate the rollout of renewable energy. In light of the situation in Ukraine and the growing cost of living crisis for British households, now more than ever it is important that we press forwards with the energy transition. Clean, homegrown energy will insulate the UK economy and protect consumers from volatile and costly fossil fuel markets.”
Energy Point welcome these changes made by the Chancellor and the wider government – it’s clear from previous research and studies that solar panels will greatly reduce the energy bills of homeowners across the United Kingdom.
By completely eliminating the 5% VAT charge on the cost of solar products for homeowners, we can expect to see people paying less for energy bills.
The Government did announce that unfortunately Northern Ireland would not be receiving the VAT reduction, but Mr Sunak did claim that funding arrangements would be made to match the commitment to green energy investment.
Under the new plans, wind and water turbines will also be eligible for 0% VAT – bolstering the UK’s plans for green energy solutions.
There are of course, political criticisms from across the aisle; claiming that Mr Rishi Sunak could have announced a windfall tax on the profits of the gas & oil energy companies (which have been in the spotlight for their massive rise in recent profits).
Many are hoping that this is just the beginning of more, green-energy positive actions, to be undertaken by the UK government.
LAST YEAR – Prime Minister Boris Johnson announced that UK homeowners will be eligible for a £5,000 grant for heat pumps. It would appear that the government are continuously bringing in new plans to take homeowners over to clean energy.
Solar Panels Vs Heat Pumps? Research and studies would suggest that solar energy is the cheaper and more effective green energy solution. Heat pumps are also, not as versatile, and adaptable – most people can get solar panels, not everyone can get heat pumps.
We’ve found homeowners can save up to 70% on their energy bills with solar panels. Further to this massive saving (which works out on average £800/yr) – you can also add 14% value to your property in England – that’s a whopping £16,701!
The government has made clear and positive action to reducing the impact of gas price rises on homeowners. Mr Sunak’s plans will also do its bit against climate change.
Reducing VAT to zero is a massive assist to homeowners and those looking to save energy bills and invest in the value of their home.
Energy Point believe that more could be done to fight climate change and help those struggling with rising living prices, and support further positive action.
Energy Point is a renewable energy & energy efficiency consultancy organisation located near Leeds, UK. We specialise in publishing reports on climate change and the latest renewable energy technology. Our data is gathered from top organisations such as the White House, the UK Government, the UN and other institutions and research establishments.