On 23rd of March Lucie Heath wrote in Inside housing about the government to cut VAT for homeowners on retrofit materials. According to him, The chancellor has stated that homeowners who install energy efficiency measures in their homes would no longer have to pay VAT on the items they use.
Homeowners will no longer have to pay 5% VAT on goods such as “solar panels, heat pumps, or insulation” for the next five years, according to the chancellor’s Spring Statement in the House of Commons.
Mr Sunak revealed the new tax rules as part of a slew of initiatives aimed at easing the burden of growing energy costs on British consumers.
“As energy costs grow, we know that energy efficiency will make a major difference in bills,” he added. “However, at the moment, only some items qualify for 5% VAT relief, and there are complex criteria concerning who is eligible.”
The government has previously been blocked from extending the relief by the European Court of Justice, according to the chancellor.
“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 limited the application of the relief,” the government said in documents accompanying the chancellor’s speech. The government will also provide additional help by instituting a time-limited zero-rate policy for the installation of [energy-saving materials].”
A typical family installing rooftop solar panels will save more than £1,000 in total installation costs, according to the study.
As a result of the revisions, homeowners will pay no VAT on retrofit materials for the next five years beginning in April.
Inside Housing has urged the government to confirm whether the VAT cut will assist social landlords as well.
Up to 2026-27, the strategy is estimated to cost the Treasury £280 million.
The Northern Ireland Protocol will prevent the Treasury from implementing the tax cut in Northern Ireland, however the chancellor has stated that Northern Ireland will receive cash equivalent to the relief’s worth until the tax cut can be implemented.