UK Chancellor brings forward green technology business rates exemption

UK Chancellor Rishi Sunak’s move to exempt business rates for green technology and cut VAT to 0% on domestic energy-saving materials has been welcomed by the renewable energy industry.

As part of his Spring Statement, Sunak announced homeowners having insulation, solar panels and other energy efficiency measures installed will pay 0% VAT for the next five years. The Association for Renewable Energy and Clean Technology (REA) has been calling on these tax cuts for some time.

On top of the VAT cut, the Chancellor has brought forward an exemption on business rates, making green technology including heat pumps and solar panels exempt from April this year. This is expected to be worth approximately £170 million (€203 million) over the next five years to support the decarbonisation of buildings.

Measures to make low-carbon heating more available, clarity on red diesel, a freeze on fuel duty, new renewable energy spending, and a windfall tax on fossil fuel companies were all missing from the Spring Statement.

While the REA welcomed the additional support for domestic renewables, it said the government could still do more to ease the energy crisis, such as expanding the range of technologies included as ‘energy-saving materials’, like energy storage.

“The REA warmly welcomes today’s announcement to remove VAT on domestic renewables for five years,” said Amy MacConnachie, director of external affairs at the REA.

“We have long campaigned for this change because we know these installations will help protect people from volatile gas prices and reduce their energy bills, while also supporting the transition to net zero and providing a catalyst for new jobs and investment across the country.

“The move to bring forward business rate exemptions for green technologies from April 2022, including solar panels and heat pumps, will help to further drive down costs and support the decarbonisation of buildings.

“We now to see the government clarify and go further on the range of technologies included as energy-saving materials, particularly energy storage, but this is a positive package of measures for the sector.

“We stand ready to deliver an energy future that is independent, secure, and stable.”

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