Industry ‘sigh of relief’ as government cuts VAT to 0% on renewables  

The government’s announcement, this week, to cut VAT on renewables and energy efficient technology to 0% has come as a welcome move by key bodies in the industry.

The Heat Pump Federation

Director of growth and external affairs, Bean Beanland, said: “We, in concert with others in the sector, have long argued that the tax regime in the UK has favoured the burning of fossil fuels, so this is a particularly welcome measure. We also understand that all materials and services are included. This level of simplicity is essential for the installer community, many of which are micro-businesses that struggle with overly complex tax rules.” 

“Setting the intervention for five years gives future visibility, which will encourage investment in both skills and capacity, by the whole sector in the UK. When taken in conjunction with the new Boiler Upgrade Scheme, which also starts on 1st April, domestic scale heat pumps are going to be that much more affordable for both homeowners and landlords. “ 

“Capital costs are only one half of the equation, operational costs for heat pumps do still have to be addressed through the rebalancing of taxation on electricity and fossil fuels that reflects the relative carbon and other emissions. But for today, the VAT outcome is to be celebrated and the government commended for the message that this sends to consumers and to the industry alike.” 

The Heat Pump Association

Phil Hurley, chair of the Heat Pump Association said: “The spring statement comes with great news for the heat pump industry and households today. The HPA has been working hard behind the scenes calling for financial incentives to tackle the barriers to heat pump uptake, and the decision to cut VAT from 5% to zero on energy-saving measures is an important step forward.  

“Whilst this decision alone will not be enough to enable all households to access technologies such as heat pumps, we are confident that it will play a role in helping to accelerate the switch to low carbon heat. But we must remember that more steps still need to be taken to support the rollout of heat pumps, including the removal of illogical environmental levies on electricity.” 

The Electric Contractors’ Association

“The industry breathes a sigh of relief at today’s announcement by the Chancellor. These are measures that will ultimately boost long-term growth for the economy, leaving families better-off, and our nation better protected from the impacts of global crises on energy prices.  

“However, there is no time to rest easy – the electrotechnical sector must seize this opportunity to focus on delivering the installations and energy efficiency measures that will result in cheaper bills and lower carbon emissions for consumers. 

“Only with the right investment in apprenticeships, skills and competence will that ambition be realised. While it is reassuring to have backing from the government, there is a lot more that needs to be done.” 


Griff Thomas said: “The announcement offers a great opportunity for installers to upskill to meet growing demand for renewable technologies. Does it go far enough to help the population cope with the rising cost of living? Well, no, but it does offer a welcome reduction in upfront costs – something that has been a major barrier to uptake in the past – and will hopefully be enough encourage those who’ve been waiting for the right moment to take the plunge – with knock on effects for everyone else and an acceleration towards net zero.”

National Insulation Association

Derek Horrocks, Chair of the National Insulation Association (NIA), said: “Insulating homes is essential to the success of the Government’s plans to reduce carbon emissions in line with climate objectives, but we know that measures are not being installed on the scale required to reduce energy demand in homes and tackle the cost-of-living crisis.

“The VAT cut on energy efficiency introduced by the Chancellor today could make a strong contribution to tackling the cost barrier to energy efficiency improvements in the UK, but the NIA welcomes the decision with caution that other financial support will be needed for homes where this incentive is not the right solution. Taking a whole-house fabric first approach will help to ensure that homes are fit for low carbon solutions be it immediately or some years later so it is great that the VAT cut will apply to an array of solutions.”  


AceOn Energy managing director, Richard Partington, said the move was welcome – but needed to be backed up with a raft of further measures to support the renewable energy sector.

“We have been calling for the axing of VAT on renewables ever since it was increased in 2019.

“With prices for conventional energy spiralling out of control and a growing realisation that we are in the last chance saloon as far as climate change is concerned, this is long overdue but still very welcome news.

“But the Chancellor cannot now sit back and think he has done everything he can to drive the uptake of the clean, renewable technologies which will help this country address the climate change crisis.

“There was no announcement of new, large-scale energy spending or a windfall tax on fossil fuel companies, which would help move the needle firmly in favour of the green economy.

“There needs to be more action to make the installation of renewable energy an integral part of housing policy – both in new and existing homes. Intelligent use of incentives to help consumers and businesses make the switch from fossil fuels is vital if we are to achieve our zero carbon targets.

“If the Chancellor is serious about reducing energy bills for homes and businesses, he needs to do more to encourage uptake of battery storage. This is a clear and effective way to make energy more sustainable and drive down bills for years to come.

“We would also like to see greater support for our social housing sector so that housing associations and local authorities can invest fully in the new, green technologies which will provide clean power for generations to come, help tenants lower their bills and also start building the national energy security, which we so urgently need in light of the current situation in Ukraine.”