Solar Power: VAT

Department for Business, Energy and Industrial Strategy written question – answered on 4th November 2019.

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Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

To ask the Secretary of State for Business, Energy and Industrial Strategy, what recent assessment her Department has made of the effect of changes to rate of VAT for solar energy on trends in the level of uptake of (a) photovoltaic and (b) battery storage.

Photo of Kwasi Kwarteng Kwasi Kwarteng The Minister of State, Department for Business, Energy and Industrial Strategy

The UK was required to make these changes to comply with EU legislation. Energy savings materials can still qualify for the reduced 5% rate of VAT if they meet certain criteria, including where materials costs are less than 60 per cent of total installation costs.

We estimate that the majority of standalone solar installations will fall below this threshold and will therefore be unaffected. Standalone batteries were not previously eligible and therefore are also unaffected. Batteries installed at the same time as solar are more likely to exceed this threshold and therefore be affected. We do not hold data on the uptake of domestic battery installations.

Once we have left the EU there may well be opportunities to amend the VAT treatment of low carbon technologies to ensure we can set the rates we consider are most appropriate.

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