Solar Power: VAT

Treasury written question – answered on 9th September 2019.

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Photo of Seema Malhotra Seema Malhotra Labour/Co-operative, Feltham and Heston

To ask the Chancellor of the Exchequer, what assessment she has made of the potential effect of increasing VAT on new solar-battery systems by 15 per cent in October 2019 on the rate of solar battery uptake.

Photo of Jesse Norman Jesse Norman Financial Secretary to the Treasury and Paymaster General

Changes to the VAT rules for energy-saving materials are expected to have a negligible impact on the Exchequer and on the administrative burdens on businesses. Around 1,500 future installations of solar panels, energy-saving boilers and wind turbines are expected to be affected annually, plus some other smaller scale items. This represents less than 5 per cent of the value of all installations currently eligible for the reduced rated. The remaining 95% remains unaffected.

For installations affected by the changes, the goods element of the installations will become standard rated with the labour element continuing to benefit from the reduced rate.

A Tax Information and Impact Note was published by HMRC on GOV.UK on 10 July 2019.

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