Politics · United Kingdom · 9 hrs ago

UK plans to restore VAT on home heat pumps and solar panels in April

UK plans to restore VAT on home heat pumps and solar panels in April

The UK government plans to restore 5% VAT on home clean-energy systems from 1 April, ending an exemption for heat pumps, solar panels and batteries.

Demand for these upgrades has reached record levels as gas prices have risen and household energy bills have climbed.

Industry groups warn that the deadline could prompt a rush to book installations before April, putting pressure on installers and supply chains.

The Liberal Democrats say a household installing an air-source heat pump, solar panels and a battery could face up to £1,530 in extra costs if the exemption ends.

The change may also increase the cost of government-backed low-interest loans for home energy upgrades.

Industry groups are asking ministers to reverse the plan and clarify how the tax will apply to installations booked before the deadline but completed later.

The government has not said it will change course, so households and installers are waiting for more details.

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What people are saying

Pippa HeylingsLiberal Democrat spokesperson for Energy Security and Net Zero
It is total policy madness for the government to strip VAT from electricity bills with one hand, only to slap it straight back on to heat pumps with the other.
via Guardian
Charlotte LeeChief executive of Heat Pump Association UK
creating a rush of applications ahead of April, disrupting the supply chain and making the process less predictable for consumers.
via Guardian
Chris HewettChief executive of Solar Energy UK
With domestic electricity bills now zero-rated until July next year, saving energy will be taxed more heavily than consuming it – a perverse incentive.
via Guardian