Yesterday, Chancellor Rushi Sunak announced in his Spring Statement that from April 2022, VAT will be scrapped on solar panels for the next five years. A welcome announcement for anybody who is considering installing a solar system on their house and timely as it is set against the backdrop of increased energy prices. With wholesale prices of energy quadrupling in the past year, Ofgem say “The energy price cap will increase from 1 April for approximately 22 million customers. Those on default tariffs paying by direct debit will see an increase of £693 from £1,277 to £1,971 per year”.
So, what does it mean for our you?
This news is very new and we are still trying to trawl through what the government has released but as far as we can deduce, the zero rate on VAT only applies to an installation of a domestic dwelling. This does not apply, as far as we can see, to purchasing your panels yourself, through a retailer like us. As this is for domestic residences only, the only people who will be able to verify the purpose of the installation would be an installer. We also don’t have clarity whether it extends to roofing kits and battery storage.
One of the issues we are dealing with already as an industry is the supply of products and materials. There is unprecedented demand for solar and storage and manufacturing and transportation issues haven’t yet been ironed out. There are so many macro events happening in the world, from the cost of fuel for transport, access to components and huge demand, we like the rest of the industry, feel like we are on a roller-coaster most days! However, we wanted to look at a few scenarios for you:
You purchase the solar equipment yourself through a retailer like us:
Pros: You will be able to secure the panels you want and they will be delivered next day
You will protect yourself against stock issues and potential price rises
Cons: You will not be able to benefit from the VAT saving
You speak to a VAT registered installer and get them to quote:
Pros: You will not be charged VAT on your panels
Cons: Installers will have difficulty keeping track on what is in stock at any given time and prices will only go up, so ensure that your quote is valid for a certain number of days
Installers usually have a long waiting list, due to the increased demand for solar and the lack of installers generally in the UK.
Our advice would be to be mindful of this supply and demand balance and plan ahead as much as possible. Be aware that installers will be inundated at the moment, so be prepared to wait for a quotation and/or site visit. Unfortunately, this new VAT announcement is not retrospective, so please don’t prize any panels off your roof and try and return them for a refund!
If you are considering reducing your energy bills and are interested in a system for your home, you can answer the questions in our configurator and one of our solar experts will come back to you with a quote. This will enable you to compare like for like to see how the VAT saving will affect you, against an installers quote. If you have further questions, we can then setup a phone conversation or even a zoom call to demonstrate the system to you.