Starting April 2022, the VAT on solar panels and heat pumps will be zero%
It is incredibly good news to know that in the starting week of April 2022, the Value Added Tax or so-called VAT on solar panels and heat pumps will be 0% or nil so as to say. It is a good feeling to know that at least in the next 5 years, there would be no VAT for energy-saving measures.
Key characteristics of Zero% VAT on Solar Panels
Amid harmful events such as the energy price crisis or the invasion of Ukraine, as well as their consequences on the global energy market, the UK government presents Spring Statement 2022, which focuses heavily on assisting households with rising energy prices, among many other efforts.
Chancellor Rishi Sunak declared that when energy-efficient solutions like solar panels, heat pumps, and insulation are installed, VAT will be reduced from 5% to 0%. Household installing solar panels will enjoy tax savings of over £1,000 plus savings on their energy expenditure of over £300 per year. The scheme, which will begin in April 2022 and run until 2027, would provide homes with zero VAT on energy-saving improvements for the next five years. In the case of residential solar panels, the removal of VAT, as well as other solar panel awards like the Green Export Guarantee, is expected to assist in covering the installation costs of solar panels which are prohibitively expensive for many UK households.
How does Solar Energy Work?
Solar energy is the energy that the Sun provides. It can be utilised for both heating and electricity by both private homes and businesses when converted to solar power. A surface that gathers solar energy and a means of turning the acquired energy into electrical energy or heat is used to generate solar power. Solar energy can be converted into solar power using one of two methods:
- Photovoltaic conversion is a type of direct conversion. Solar panels or solar PV would be used to generate electricity in this situation.
- Indirect Solar thermal conversion: A solar thermal collector would be used to create heat in this situation. Solar water heating is another term for this process.
Is it the Right Time to Invest in Renewables?
Given the current global situation regarding energy prices, now is unquestionably the greatest opportunity to indulge in clean renewable energy that would in the future, protect households from the instability of the market and rising gas prices in the UK. The Value Added Taxes or VAT on renewables was 5%, which was really a low rate, but eliminating it could result in individuals paying unreasonably high energy prices. The UK’s attempts to expand green energy into private houses are simply the beginning of a greener, cleaner tomorrow, and we can just hope that this encourages individuals to make energy-efficient housing choices.
Heat pumps, which are extremely energy efficient because they transport heat instead of generating it, have historically failed to compete financially with low-cost natural gas. Recent cost reductions in solar photovoltaic panels have been so significant that our research has revealed that solar-powered air-source heat pumps, even in colder locations, now make financial sense for the average home. With natural gas costs rising and becoming more volatile, as well as the UK government’s recent declaration that solar panels and heat pumps will no longer be subject to the 5% VAT, now is a great moment to invest in greening your home’s energy and heating supplies. Solar-powered heat pumps are not just a good financial investment; they are also good for the environment.
Because this is a long-term investment, it is even more critical to obtain quotes from a variety of qualified contractors in order to make a cost-effective purchase. Evergreen Power Solar is ready to assist you in receiving such offers from trained installers who specialise in customising solutions for your home