Domestic Solar is facing a new threat from the European Court of Justice ruling last Thursday, which states that UK is violating the EU VAT directive by applying a reduced, 5% VAT rate for residential solar (amongst other energy saving technologies). Currently domestic solar benefits from this reduced rate, a 15% reduction from the standard 20%. If the ruling is applied, this will only add cost to the end consumer, potentially extending the pay-back by a further 2 years with the knock on effect to the solar industry. The government is currently considering its response.
What Action can you take ?
Currently, the reduced rate applies to installations of the following technologies on, or in, residential accommodation:
- Solar panels (PV and thermal)
- Controls for central heating and hot water systems
- Draught stripping
- Wind turbines
- Water turbines
- Ground source heat pumps
- Air source heat pumps
- Micro combined heat and power units
- Wood-fuelled boilers
If you install any of the technologies listed you need to contact your MP NOW and let him/her know what effect a 15% increase on VAT will mean to your business. Click here to find out who your local MP is Find My MP
see the full article here on Solar Power Portal site Domestic solar facing 15% VAT hike following EU ruling
Also see the fascinating blog here tells us some lessons we can learn from the French VAT reduction scheme: Subsidy cuts VAT increases, threat or opportunity?