UK govt gives up plans for solar VAT hike - report

The UK government would not oppose an amendment to the budget calling for the value added tax (VAT) not to be raised on solar panels, The Guardian reported today citing the prime minister's spokeswoman.

The amendment has been proposed by the Labour party.

The UK government unveiled plans in December to increase VAT on energy saving materials, including home solar systems, from 5% to the standard rate of 20%. This was in the wake of a ruling by the EU Court of Justice that the current reduced 5% VAT rate on the installation of these materials does not comply with EU law.

However, the issue was absent from Budget 2016, announced on Wednesday last week, which the UK Solar Trade Association (STA) said raised hopes of a rethink, and there were reports in UK media that many Conservative Members of Parliament (MP) would back Labour in opposing the government over the VAT change.

The amendment is due to be voted on tomorrow.

Shadow energy secretary Lisa Nandy tweeted that Labour would keep up the pressure to ensure ministers keep their word and stop the solar tax in the Finance Bill.

Govt confirm they won't oppose our amendment & have abandoned plans to hike up VAT on solar. Thanks to all MPs who supported us #Budget2016

— Lisa Nandy (@lisanandy) 21 март 2016 г.

This comes as the European Commission is expected to release proposals on allowing greater VAT flexibility across individual countries.

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