- REA calls on the Government to remove VAT rates on domestic renewable energy and clean technologies;
- Current 20% VAT rate, imposed on the installation of home energy-saving materials due to a European Union ruling, has not been reversed two years after Brexit;
- REA says the move would protect households from volatile energy prices, deliver new jobs and support the transition to Net Zero.
The Association for Renewable Energy and Clean Technology (REA) is urging the Government to remove VAT rates on domestic renewable energy and clean technologies on the two year anniversary of Brexit.
The current 20% VAT rate was imposed on the installation of home energy-saving materials due to a European Union ruling – however this rise has not been reversed since the UK departed the EU. In comparison, fuel supplies of coal and oil and gas for heat are taxed at just 5%.
The calls come at a time when the cost of living is rising in the UK and energy prices in particular are set to spike by almost 50% in April. The REA says making domestic renewable energy and clean tech systems more affordable would insulate households from volatile global energy prices, deliver new jobs and support the transition to Net Zero.
In October, the REA was joined by nearly 30 companies and organisations across the energy industry, including the likes of EDF, Nissan, OVO Energy, Eaton and Lightsource Labs, in writing to the Government calling for these same changes.
Dr Nina Skorupska CBE, Chief Executive of the Association for Renewable Energy and Clean Technology (REA), said:
“The Government can protect UK households from soaring energy bills by giving them the ability to install renewable energy and clean technology systems in their own homes. However, the aspiration to install domestic zero-carbon energy systems remains out of reach for many due to prohibitive costs.
“That is why the Government must remove VAT on domestic renewable energy and clean technologies, a policy the UK is now free to implement following its exit from the EU two years ago. This would support the transition to Net Zero, provide a catalyst for new jobs and investment across the country, and insulate consumers from volatile fossil fuel prices.”
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Notes to editors
An energy industry coalition, led by the REA, wrote to Government in October in 2021 with two key asks:
- Extend the number of renewable energy and clean technologies classified as Energy Saving Materials (ESMs).
The ESM must now include all domestic renewable energy systems and clean technologies, including solar PV, heat pumps, biomass boilers, solar thermal, thermal storage, heat batteries, electric battery storage and domestic EV chargers.
- Reduce the VAT rates for ESMs to 0%.
This would not need to be a permanent measure, but a temporary reduction to aid the competitiveness of renewable and clean tech pricing in contrast with fossil fuels. We believe that with this finite support, the cost of these technologies will rapidly reduce over the coming years.
Read the full letter here.
About the Association for Renewable Energy and Clean Technology (REA): The Association for Renewable Energy and Clean Technology (known as the REA) is the UK’s largest trade association for renewable energy and clean technologies with around 550 members operating across heat, transport, power and the circular economy. The REA is a not-for-profit organisation representing fourteen sectors, ranging from biogas and renewable fuels to solar and electric vehicle charging. Membership ranges from major multinationals to sole traders. For more information, visit: www.r-e-a.net