The UK Government is consulting on whether VAT on batteries installed for solar panels should be zero-rated for homes and small businesses, following a long campaign by MPs.

MPs on the cross-party Environmental Audit Committee (EAC) wrote to the Government earlier this month, warning that the UK would likely not meet its target to host 70GW of solar generation capacity by 2035 without support to bring down the cost of small systems for homes and businesses.

The Committee implored Energy Security and Net Zero Secretary Grant Shapps to consider extending the current zero rate of VAT on home solar, introduced in spring 2022. Members also called on Shapps to consider extending the VAT discount rate to household battery storage fitted either with solar panels or retrospectively.

Photographing everything (Image: T. Larkum)

Photographing everything (Image: T. Larkum)

Shapps has today (31 May) responded to the Committee, with Committee chair Philip Dunne MP calling the measures detailed in his letter “very welcome”.

The letter confirms that home solar will benefit from a zero-rate of VAT for the next five years. Batteries fitted at the same time as solar panels will also benefit. The letter stipulates that batteries installed retrospectively may have no VAT, subject to the Government’s call to evidence on low-carbon materials and technologies for buildings which closed today.

Shapps also confirmed that the Government will continue exploring how it can work with the private sector to facilitate affordable loans for homes and SMEs looking to fit solar panels. His letter states that further grant funding in this space will be “announced shortly”.

Read more: edie

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