VAT Consulation

Legacy_user

HMRC has launched a consulation (11 December) with a view to increasing VAT from 5 to 20% on energy saving products (including solar panels, smart heating controls). Labour will also be at 20% unless the cost of labour is significantly less than the cost of the products.

It would seem that a European Court of Justice judgement is behind this move. Sorry it this has been posted before.

Martyn1981

The wording of the revised FiT due next year, does allow for a revision, so it could in theory be increased to compensate for this move. I suppose 1p would do it, redirecting the funds back round. However, I doubt this government will bother.

Weirdly, the move doesn't cover all renewable issues, nor the VAT rate on energy bills. If that was also increased to 20%, and all increased revenue redirected into aiding those in energy poverty, and energy efficiency measures, that would compensate for the extra cost of of PV. It would also encourage energy saving and accelerate the savings from energy efficiency purchases.

Mart.