In the recent mini budget Chancellor Rishi Sunak announced that VAT on domestic green energy projects would be removed for the next 5 years. Previously the VAT rate stood at 5%. So for the likes of solar panels, air source heat pumps and insulation there is to be no VAT.
The Chancellor commented that with soaring energy prices it was now more important than ever for homeowners to make sure that their homes were as an energy efficient as possible. Sunak criticised the “complex rules about who is eligible”.
“The reliefs used to be more generous but from 2019 the European Court of Justice required us to restrict its eligibility,” he told the Commons.
“But thanks to Brexit we’re no longer constrained by EU law.”
Jon Carter, MD of Carter Electrical Installations, commented on this change. “We are already very busy with green energy projects. The absence of VAT can only help more householders want to go ahead with alternative energy sources”
At the last Budget, delivered in October 2021, Sunak confirmed a new rates relief scheme for businesses looking to fit low-carbon technologies onsite, including rooftop solar, battery storage and cycling infrastructure. Heat network installations will benefit from a 100% relief.
This was originally set to run from 2023 to 2035. With these announcements, Sunak has brought its introduction forward to April 2022.