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Heating: VAT

Question for Treasury

UIN 157518, tabled on 21 April 2022

To ask the Chancellor of the Exchequer, what assessment he has made of the potential merits of including infrared heat panels in zero rating VAT policy in respect of energy saving measures.

Answered on

27 April 2022

The Chancellor announced at Spring Statement 2022 that the VAT relief for the installation of energy saving materials (ESMs) will be expanded in Great Britain.

From 1 April 2022, complex eligibility conditions to access the relief have been removed and wind and water turbines have been reinstated as qualifying materials. Qualifying installations will also now benefit from a VAT zero-rate until April 2027. Overall, this represents an additional £280 million of support for investment in ESMs over the next 5 years.

This will support the uptake of products that are used to increase the energy efficiency and decarbonisation of residential accommodation. These improvements are key to reducing gas dependency and household bills and are also a vital part of the UK’s transition to Net Zero.

While infrared heat panels were not added to the list of materials which qualify for the relief, the Government keeps all taxes under review and continues to welcome representations on how the tax system can be improved.

The Government recognises the importance of ensuring that policy remains in step with the rapid pace of technological development in the ESMs market and the changing policy context since this particular relief was first introduced.

That said, requests for further changes should be viewed in the context of over £50 billion of requests for relief from VAT received since the EU referendum. Such costs would have to be balanced by increased taxes elsewhere, increased borrowing, or reductions in Government spending.

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