Carbon Emissions

(asked on 29th June 2021) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, in what circumstances low carbon investments pay (a) 20 per cent and (b) five per cent VAT.


Answered by
Jesse Norman Portrait
Jesse Norman
This question was answered on 7th July 2021

VAT is a broad-based tax on consumption and the 20 per cent standard rate applies to most goods and services. While there are exceptions to the standard rate, these have always been limited by both legal and fiscal considerations.

One such exception is the reduced rate of VAT of 5 per cent for the installation in residential accommodation of certain energy-saving materials, such as ground source heat pumps, air source heat pumps and solar panels, that help to reduce carbon emissions. Detail about the circumstances in which such reliefs apply can be found in VAT Notice 708/6 on energy-saving materials and heating equipment: https://www.gov.uk/guidance/vat-on-energy-saving-materials-and-heating-equipment-notice-7086.

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