Calls to 'resist' proposed solar panels VAT rise

Proposals to increase VAT on solar panels have been attacked.

Homeowners only pay 5% VAT when installing a solar panel or solar thermal hot water heating system as opposed to the standard rate of 20% VAT on other goods and services.

The Government has put forward a proposal to increase this to 20%, which campaign groups warn would add £900 to the cost of a typical solar installation on a house.

Greenpeace UK's chief scientist Dr Doug Parr said: "A vital part of the sustainable energy future being championed in Paris today is being undermined in London by changes to VAT that must be resisted.

"In addition to the confusion created by dramatic cuts to solar support, this creates a new round of uncertainty for business, and more expense for homeowners who are seeking to do their bit for the climate, as loudly requested by David Cameron last week.

'This move makes a mockery of Cameron's claims to climate leadership, and shows once again that it is Osborne who is ultimately holding the reins on energy policy in the UK."

A consultation on the issue stems from an EU court ruling that the UK's current reduced rate of VAT for solar and other energy saving products violates the EU's VAT directive.

Mike Landy, head of policy at the Solar Trade Association said: "This requires urgent action from both the UK Government in London and the European Commission in Brussels."

Alasdair Cameron, renewable energy campaigner at Friends of the Earth said: "That solar could soon need to pay higher VAT than oil is just crazy.

"It's another sign of the Chancellor's incoherent approach to energy policy, and completely at odds with the UK's rhetoric on tackling climate change.

"As these changes would push up the costs of small scale renewables - like rooftop solar - it makes reversing the Government's proposed cuts in support for those technologies even more urgent.

"Renewable energy is going to be the defining industry of the 21st century, the UK government needs to get on board and work to support the sector, rather than hold it back".