Brexit ‘could prompt reversal of solar panel VAT hike’

Reversing the hike in VAT rates on solar panel installations could be a side benefit from Brexit, a Conservative former MEP has claimed.

Today (1 October) has seen VAT on solar panels increase from 5 to 20 per cent in line with the standard level, even though much more heavily polluting heating coal and fuel continue to enjoy the lower rate.

Responding to a question at a fringe meeting at the Conservative Party conference, Chelmsford MP Vicky Ford said that the government had no choice over raising the rate within EU tax rules.

She said: “Within the customs union we have to have the same VAT level.”

But Ford, who normally adopts a soft Brexit position within the Conservative party debate on leaving the EU, said the government could change its stance on the issue if and when the UK leaves the EU, currently due to take place on 31 October.

She said: I’m sometimes sceptical about the comments about the benefits of leaving the EU but this is one.”

Colin Beaney, global industry director for energy, utilities & resources at IFS, criticized the rate hike.

He said: “While, to some extent, this change is linked to the UK’s current membership of the EU, and may be altered following a withdrawal, it is an outrage that the government should reduce this small discount available to the environmentally conscious UK residents willing to invest personally in sustainable solutions.

“While VAT for coal and gas still sit at just five percent, and the nuclear industry receive huge subsidies despite significant delays and cost overruns, the government should urgently clarify its position on energy policy. This includes ensuring that businesses and the public are aware of the incentives available for renewable solutions, and actively embrace them to help achieve the country’s ambitious decarbonisation goals and maintain its environmental leadership position.”