Industry leaders, environmental groups, and 17,500 members of the public are urging the government to reconsider a tax change they say will depress installations of solar panel systems.
Under a new law proposed by HMRC, VAT on new solar and energy storage products will rise from 5% to 20% from October. However, the tax on coal and gas products will remain at just 5%.
The industry and environmental groups have previously warned that high taxes on solar panels will make them economically unviable for households, and just as the UK commits to entirely decarbonise its energy system and overall economy.
Green supplier Good Energy has put forward a petition asking the government to “rectify the mistakes of the previous government” and withdraw the tax hike.
The letter, addressed to Chancellor Sajid Javid, Prime Minister Boris Johnson, Business and Energy Secretary Andrea Leadsom and Energy Minister Kwasi Kwarteng, calls on the government to make addressing climate change a priority and to continue supporting the green revolution in homes.
The letter states: “There are more than one million solar PV installations now in operation across the UK. Their sum capacity totals more than our single biggest power station. This has grown from near-zero within 10 years, showing what can be achieved when we encourage people to be part of the solution to climate change. We need to ensure that this momentum is not lost.”
It’s been signed by green advocacy groups Renewable Energy Association (REA), 10:10 Climate Action and Friends of the Earth and 17,500 people—and counting.
Chief executive of the Renewable Energy Association (REA) Dr Nina Skorupska, said in June: “The VAT proposals will create a barrier to British homes and businesses who are seeking to take action on climate change and reduce their bills by installing solar with battery storage.”
The government “should be doing all it can to install these technologies rather than enacting barriers,” she said.
Solar panel installations have already fallen in the UK, following the removal of government subsidies and the closure of the feed-in tariff scheme in April.
In August energy consultants Wood Mackenzie cautioned that the tax hike would also leave the UK out of a European-wide boom in home battery systems. Solar battery storage systems increase the usability of renewable energy, and residential capacity is predicted to increase by fivefold across Europe over the next five years. However, high taxes on the systems will limit uptake in the UK, a report from the consultants said.
A spokesperson for HMRC defended the tax changes: “The government is proposing changes that retain as much of the VAT relief as possible for energy-saving materials while ensuring compliance with EU law.”