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Chancellor cuts VAT on insulation, heat pumps and solar panels

23 March 2022

The Chancellor has announced VAT for solar panels, heat pumps, roof insulation will be reduced from 5% to zero for five years.

Chancellor Rishi Sunak pledged to end VAT rates for energy saving materials in the latest Spring Statement delivered to parliament, coming into effect from April 2022.

The Government hopes this relief will help households improve energy efficiency and keep energy costs down, as well as, support the UK’s long-term Net Zero ambitions.

The Treasury clarified that this 0% VAT applies both to the materials used and the cost of installation – but may not apply to insulation materials a householder can go and buy themselves.

Sunak also pledged an extra £500m for the Household Support Fund, on top of £500m the government has already provided since October 2021, designed to help the most vulnerable households with essentials including utilities.

Although VAT cuts on heat pumps and solar panels will help traders and those who can afford to fit them, it will not help those who cannot afford energy saving measures in the first place.

Critics have voiced concerns that the measures don’t go far enough to help households in fuel poverty, and who may struggle to pay increasingly large utility bills.

“If that’s all he’s doing on energy – it is limited and won’t impact the majority of households who will see a likely £1,300 average increase in year-on-year bills by October.

My head has sunk. I just hope there’s a rabbit to come out of the hat. #SpringStatement2022

— Martin Lewis (@MartinSLewis) March 23, 2022
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