APHC has pledged its support to the Government as the EU Commission demands a change to the UK law on VAT on Energy Saving Materials (ESM).
The reduced 5% VAT rate for the supply and installation of energy saving materials such as solar P.V. panels and cavity wall insulation, has been described as ‘beyond the scope’ of the EU’s VAT directive and needs to change or the UK Government will be referred to the European Court of Justice. A two month window has been identified by the EU Commission within which the legal change is required to be made.
The EU directive allows reduced VAT to be added to a range of goods and services including foodstuffs, water supplies and medicines but does not include ‘energy saving materials’.
John Thompson, APHC Chief Executive commented: “Scrapping the reduced VAT rate now could seriously damage the UK renewable market and could also affect Government plans to reduce Carbon emissions under its energy policy. Any change now could also have a detrimental effect on the introduction of the Green Deal scheme. We fully support the Government on this matter and hope some agreement can be reached between the two parties that does not involve a change in the current 5% reduced VAT rate.”
