Solar Energy UK and what it describes as a wide variety of industry and environmental groups wrote to the Chancellor, Rishi Sunak, on 18 March 2022, calling for the rate of VAT on domestic renewable and energy efficiency technologies to be reduced to 0% as part of the Spring Statement1. The trade body said the request was made in response to the energy price crisis1.
The letter was published by Solar Energy UK alongside its announcement1. The organisation said it had recently published a briefing on the energy price crisis1.
"Solar Energy UK and a wide variety of industry and environmental groups have today written to the Chancellor, Rishi Sunak, calling on him to reduce the rate of VAT on domestic renewable and energy efficiency technologies to 0% as part of the Spring Statement."
The announcement does not name the other signatories to the letter, and it does not set out which technologies would fall within the proposed 0% rate1. No cost to the Exchequer, no estimate of the number of households affected and no figure for the current VAT rate applied to such installations appear in the announcement1. Those details have not been reported in the material published by Solar Energy UK1.
The Spring Statement is the fiscal event at which the group asked for the change to be made1. The announcement does not state what response, if any, the Treasury gave, and no date is given for a decision1.
Why it matters for households
VAT treatment sits directly on the price a household pays for a home energy installation, so a change in the rate changes the upfront cost of equipment such as solar panels and energy efficiency measures. The existing relief for energy-saving materials is a long-standing feature of the tax system, and its scope and duration are separate questions from the rate itself. Households weighing up a purchase against a closed heat payment scheme or other support have to compare the tax position with whatever grant funding is available at the time.
For a home's energy independence, the upfront cost of generating or saving energy on site is the main barrier the letter addresses. A lower rate would reduce that barrier for the technologies in scope, though the announcement does not say which those are1. Nothing in the announcement changes any household's current tax position; it is a request to the Chancellor, not a decision1.
What happens next
The request was made ahead of the Spring Statement1. Solar Energy UK has not reported a response from the Treasury, a date for a decision, or the names of the other signatories1. The 0% VAT relief on energy-saving materials has its own end date, which is unaffected by this letter.