VAT cut for home solar battery systems

By Gem Childe on 7th Aug 2017

The Solar Trade Association is celebrating securing a 5 per cent rate of VAT on battery storage for householders who install a new solar PV system.

The industry body said that the tax break would significantly improve the economics of installing domestic solar panels and bring the VAT treatment of battery storage in line with the treatment of household fuels, grid energy supply and other onsite technologies.

Following a meeting with HMRC the STA discovered that the official position was that all storage was considered standard rated at 20 per cent VAT. The STA agreed to provide evidence to justify why battery storage should attract a reduced rate when installed alongside a PV system. The paper called on HMRC to issue a notice giving clarity as a matter of urgency, followed by a second ask for HMRC to consider 5 per cent VAT rate for all battery storage, whether installed at the same time as a PV system or retrofitted to an existing PV system.

Seb Berry, the STA’s vice-chairman and head of external affairs at Solarcentury, said: “This is a helpful and welcome decision by the Treasury following a major lobbying effort from the Solar Trade Association. Reduced VAT on new systems will encourage homeowners to embrace storage technologies alongside solar. Solar remains a good investment and storage means householders can now take even greater control of their energy bills. All STA members will be delighted by this win.

"The policy wins are needed as solar deployment has fallen to a seven year low. The industry is struggling with a policy framework that now provides tax breaks for fossil fuels that are not applied to solar.”

Leonie Greene, head of external at the Solar Trade Association, said: “The policy win also comes as BEIS releases its latest public opinion tracker on energy showing solar retains its top spot as the nation’s energy sweetheart at a massive 86 per cent of the public supporting the technology. Only 1 per cent of the British public is strongly opposed to renewables.”