WARMING UP
Rishi Sunak confirms VAT cut for cheaper home insulation, solar panels and heat pumps to drive down energy bills
RISHI Sunak has scrapped VAT on home insulation, solar panels and heat pumps to drive down bills in a post-Brexit boost.
The cost of going green and making homes more energy efficient got a win at today's Spring Statement.
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The price of wall, floor or loft installation, as well as solar panels and heat pumps will be slashed in a fresh bid to encourage people to upgrade their homes to stop heat escaping.
More than 19 million homes are rated band D or below for energy efficiency.
It means their leaky properties don't hold heat well enough and people are forced to whack up their heating for longer.
Some four million properties are in need of cavity wall insulation and 5.5million need it in their lofts, according to research from the Conservative Environment Network.
The VAT cut will come in from the start of April this year - and last for five years.
Mr Sunak told MPs today: "As energy costs rise, we know that energy efficiency will make a big difference to bills.
"But if homeowners want to install energy saving materials… …at the moment only some items qualify for 5% VAT relief… …and there are complex rules about who is eligible.
"The relief used to be more generous but from 2019 the European Courts of Justice required us to restrict its eligibility.
"But, thanks to Brexit, we’re no longer constrained by EU law. So today, I can announce for the next five years, homeowners having materials like solar panels, heat pumps, or insulation installed will no longer pay 5% VAT– they will pay zero.
Read more on the Spring Statement
"We’ll also reverse the EU’s decision to take wind and water turbines out of scope – and zero rate them as well.
"And we’ll abolish all the red tape imposed by the EU. A family having a solar panel installed will see tax savings worth over £1,000. And savings on their energy bill of over £300 per year."
Other measures announced in today's Spring Statement include:
- Fuel duty cut by 5p per litre - saving families £3.30 every time they fill up their tank - from 6pm TONIGHT
- National Insurance threshold to rise from £9,500 to £12,500 - worth over £330 a year - from JULY
- Income tax rates will be cut from 20p to 19p in 2024
- VAT slashed to 0% for insulation, heat pumps and solar panels in Brexit boost - comes in from April 2022 for five years
- Extra £500million for hard-up Brits through the Household Support Fund - from April
The Sun revealed a string of MPs including former Cabinet ministers Robert Jenrick and Steven Crabb called for a VAT cut last week - lobbying the Chancellor for extra help.
The move will save people wanting to make their home warmer hundreds of pounds.
Cavity wall insulation could see nearly £200 saved, and loft insulation around £150 saved, according to number-crunching from CEN.
And the insulation from the two measures could shave up to £500 off bills over two years.
Sam Hall as Director of CEN said: “With households struggling with rocketing gas prices, the Chancellor is right to heed the calls of Conservative backbenchers and cut this tax on energy efficiency.
“Insulating homes is one of the best ways to keep people warm, reduce Russian gas imports, and lower energy bills.
"Slashing VAT on energy saving materials and installation will help families afford these improvements and cut their energy costs permanently, saving the Treasury money in the long run by dealing with one of the root causes of fuel poverty."
Yesterday Money Saving Expert, Martin Lewis, predicted that the energy price cap would likely rise to £2,500 later this year - and the Chancellor must step in to help them.
READ MORE SUN STORIES
He told MPs that people will feel a "fiscal punch in the face" when bills soar on April 1, and called for a vulnerable persons price cap to protect the poorest Brits from steep rises they can't afford.
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