Requests to Scrap VAT: The Power of the Sun

The Government has been considering changes to the way which the ‘Reduced Rate’ of VAT applies to the installation of energy saving materials.

Trade associations representing the smart power industry have written a joint letter to the Government and have called for elements of the proposals to be scrapped.

The issue at stake is that the ‘Reduced Rate’ of VAT may still apply where the value of the goods installed does not exceed 60% of the value of the installation supply.

The joint letter, which was signed by the Solar Trade Association (STA) and the Sustainable Energy Association, claims that evidence from across the sector suggests that the proposals could lead to “bankruptcies and job losses”.

The letter goes on to say that if the proposals take place, the threshold for material costs should be raised to 85 per cent, as this could ease the impact on the UK’s “nascent battery storage and other smart power technology markets”.

According to the STA solar installations have an “exceptionally high requirement” for skilled labour. Therefore, although as the proposals stand, most solar-only schemes will “comfortably” fall below the 60 per cent threshold, some schemes are still at risk. The STA added there is also a “significant risk” to installations of solar and battery storage, as the material costs will likely often be over the 60 per cent threshold.

Meanwhile, in another solar related matter Chris Bryant MP has called on ministers to scrap VAT on sunscreen in a bid to cut skin cancer by encouraging more people to use it.  He feels strongly on this matter after being treated for the condition himself.

Mr Bryant’s VAT argument is that there is more the Government could do to encourage more people to use sunscreen, and one option would be to take VAT off sunscreen that is higher than SPF-30 or SPF-50.

Julian Borley, Director of VAT at Milsted Langdon, said: “It will be interesting to see if these requests will be listened to.

If any business has any doubts as to whether they will be effected by the changes in the ‘Reduced Rate’ they should seek specialist advice.”

For more information about VAT changes or for advice, contact Milsted Langdon today.

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