Vat On Solar Panels In Uk

The uk government has declared that we are facing a climate crisis but in a somewhat contradictory move is simultaneously proposing a higher rate of vat on solar panels of 20.

Vat on solar panels in uk.

Experts say the move could set decarbonisation of the uk back by years and is entirely uneconomical. Uk government tax department hm revenue and customs hmrc has put forward legislation to increase the vat rate for solar and battery storage from 5 to 20. The government has introduced secondary legislation to amend the scope of the 5 rate to comply with european vat rules si 2019 958. It pays 5 000 for the solar panels and battery excluding vat and charges its customer 7 500 excluding vat for the installation.

To help us improve gov uk we d like to know more. The 5 rate applies to the installation of these items as hmrc s guidance makes clear installation in this context means putting in place energy saving materials adding if. Vat and other taxes on shopping and services including tax free shopping energy saving equipment and mobility aids. Hm revenue and customs hmrc is set to introduce higher vat rates for the installation of a number of renewable and sustainable energy sources such as solar panels and biomass boilers.

The 5 rate on esms includes the installation of solar panels. This follows long standing infraction proceedings against the uk by the european courts who. 2 vat on solar panels. At present vat is charged at the reduced 5 rate on the installation of energy saving materials esms including solar panels in residential accommodation.

Following infraction proceedings by the european commission against the uk in 2015 hmrc published a consultation on proposed changes to the vat treatment of energy saving materials. This took effect from 1 october 2019 although the government has stated that the majority of solar. Changes to the vat treatment of solar panels and other energy saving materials are not as extensive as first feared.