UK: Solar Trade Association secures government climbdown on battery tax

UK taxation department HMRC agrees to place batteries sold with a new solar system in 5% VAT tax rate following lobbying by the Solar Trade Association. Government will also consider proposals to offer reduced rate to all storage.

With 13 GW of solar installed in the U.K., much of it atop more than 1 million rooftops, PV is poised to play a huge role in electricity generation this summer.

Image: Solarcentury

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A further boost to the U.K.’s maturing energy storage sector was confirmed today following the news that Her Majesty’s Revenue and Customs (HMRC) department has decided to place just a 5% VAT rate on batteries that are sold with new solar PV systems following close discussions with trade body, the Solar Trade Association (STA).

HMRC had previously considered that all storage in the U.K. should be banded in the 20% VAT range, but the STA’s argument that batteries – when purchased as part of a solar package – should be brought in line with the treatment of household fuels, grid energy supply and other onsite technologies fell on sympathetic ears in government.

After a meeting between HMRC and STA representatives, the STA provided evidence to justify why battery storage should attract that reduced rate when installed alongside a PV system. “Reduced VAT on new systems will encourage homeowners to embrace storage technologies alongside solar,” said Seb Berry, STA’s vice chair and head of external affairs at Solarcentury. “Solar remains a good investment and storage means householders can now take even greater control of their energy bills.”

With just 5% VAT, home batteries are now a more viable option for would-be solar customers in the U.K., and this win for the industry comes at a time when solar deployment rates in the country are at a seven-year low following a series of swingeing cuts to subsidy and support.

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However, despite the government going cold on solar support, the majority of the British public remain firmly behind PV.

“The policy win comes as [government department] BEIS releases its latest public opinion tracker on energy showing solar retains its top spot as the nation’s energy sweetheart at a massive 86% of the public supporting the technology,” added the STA’s head of external affairs Leonie Greene.

The STA has pledged to continue engaging with HMRC to convince it to lower the VAT rate for all storage technologies – whether purchased alongside solar, or not.

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