In his Spring Budget, the Chancellor of the Exchequer, Rishi Sunak, has slashed to 0% the VAT on renewable technologies, meaning that solar panels, heat pumps, and insulation will now become affordable and accessible for many more homeowners.
0% VAT on renewable technologies is great for those who want to do their bit to contribute to net-zero carbon targets set by the government, especially when combined with the recent news that the Energy Performance Certificate ratings for air source heat pumps is set to be reviewed, paving the way for the positive impact made by such low-carbon technologies to be properly recognised.
It finally feels that we’re reaching the consumer tipping point that the renewables industry has long pushed for. We’ve known for years that many people want to make changes to their home that will make it more energy and cost efficient, but are put off by the process of accessing grants and loans to fund the work. The government hasn’t made it easy for people to work out what help is available to them, and that’s been a real barrier for some.
However, the government has now set a target date of 2045 for zero emissions of all greenhouse gases, and that means it’s time to take proper measures towards making renewable technologies not just more accessible, but much more affordable too.
Up to now, under EU rules, 5% VAT relief was available only on some materials and only for some customers. The change implemented by the Chancellor will see 0% VAT paid on both materials and the cost of installation of air and ground source heat pumps, solar panels, external and internal insulation, and wind and water turbines.
So, what will this 0% VAT change mean in practice? The Treasury estimates that homeowners will save £1000 on the installation of solar panels, as well as saving around £300 on annual energy bills – and don’t forget, there are still grants and loans available, even if they do require some detective work up-front.
The good news is, McGill has been working on renewable technologies for a number of years, and we know how to support customers through the process. With this VAT relief for customers in the news, we’re already beginning to receive more enquiries from homeowners, and our experienced Renewables Division is looking at its busiest few years yet.