VAT on Green Energy: Why Now is the BEST Time to Invest in Renewables
It’s no secret that homes across the UK are struggling.
As the UK’s cost of living crisis wages on, energy bills seem to keep on soaring and it doesn’t look like it’ll slow down any time soon.
Fortunately, recent government measures are now helping homes across the UK save on energy bills while reducing their carbon footprint by paying 0% VAT on renewable heating systems.
So, how can you lower carbon emissions without breaking the bank? Find out in this post.
Savings on Energy Saving Materials
In 2022, the UK government introduced temporary tax measures that would help transform the nation’s energy infrastructure.
It was announced that VAT on renewable energy installations would drop from 5% to 0%, helping people across the UK take advantage of renewable energy sources and lower their utility bills.
This VAT reduction on ECO Friendly materials has been a huge incentive for homeowners and business owners alike, allowing them to make the switch to renewables without breaking the bank.
By paying no VAT on renewable energy installations, UK households could make tax savings of up to £1,000 while making savings of up to £300 per year, according to Prime Minister Rishi Sunak.
Installations of renewable technologies, such as biomass boilers, air source heat pumps and solar PV systems, have become increasingly affordable due to the reduced costs associated with these tax measures.
Under this tax break, you can also simultaneously install other measures (such as loft insulation), but most of the work must be for energy-saving materials.
The scheme is set to run until 31st March 2027, when the VAT rate will return to 5%.
How can the ECO Scheme help?
While a cut in VAT is great, it’s hard to ignore that the cost of installing renewable energy solutions can be quite high for some.
However, the UK government’s tax measures have helped to reduce the barriers to entry when it comes to renewable energy. This means that people are now able to access technologies that help decrease their carbon footprint and save money on utility bills in one go.
But if paying 0% VAT on solar energy isn’t enough, some UK households could be eligible for partially or fully free solar panel installation through the Energy Company Obligation (ECO) Scheme.
The ECO is a government energy efficiency scheme designed to help UK households reduce their energy usage and carbon emissions.
Under the ECO scheme, households could be eligible for free or discounted installation of renewable technologies, such as solar panels, air source heat pumps and biomass boilers. However, certain criteria must be met to benefit from the scheme.
Currently, there are two variations of the scheme, ECO4 and Great British Insulation Scheme (formally ECO+).
The fourth phase of the scheme, ECO4, is aimed at lower-income households and those on certain benefits, while the Great British Insulation Scheme is aimed at homeowners who live in vulnerable households but do not receive government benefits.
To find out if you’re eligible for the ECO4 or Great British Insulation Scheme, contact us today!
Save on energy bills the smart way
Thank you for reading our post on why now is the best time to invest in renewables.
As discussed, reducing your carbon emissions and lowering energy bills can be made easy with the help of reduced VAT rates on green energy installations and government schemes such as the ECO4 and Great British Insulation Schemes.
With tax breaks, government incentives and lower installation costs, homes across the UK are now able to reduce their carbon footprint and save money on energy bills the smart way.
To find out more about how you can make the most of paying 0% VAT on green energy, complete our free online eligibility checker.