Solar industry welcomes government policy reversal on VAT rate

The Solar Trade Association has welcomed a change on the rules for VAT on solar as “very welcoming”. HMRC has announced the VAT hike on domestic solar PV and solar thermal installations from 5% to 20%. However they further announced that solar would continue to benefit from the lower rates of VAT.

Leonie Greene, Head of External Affairs at the Solar Trade Association:

“The signals coming from Government appear to be very encouraging. Increasing VAT on solar to 20% while retaining 5% for grid electricity, gas and oil defies all logic, which is why the STA has consistently taken a strong line on this issue. The Chancellor can and should stand up to Brussels on this – lower VAT on domestic solar is within the guidelines set out in EU law.” “We hope that Treasury will issue an official statement confirming the Government’s intention as soon as possible, as HMRC is still in theory considering responses to the consultation on this. We also want to see the reduced solar rate of VAT in black and white in the Finance Bill later this year. What prospective solar homeowners and the industry needs more than ever is certainty – we need to know for sure.” “The solar industry owes a big thank you to the MPs of all parties who rallied in support of solar over the last week and put their name to the amendment.”