The UK government should create a level playing field for home energy storage by reversing a decision to increase VAT, according to a coalition of industry groups and the Association for Renewable Energy and Clean Technology (REA).
In an open letter to government, the home energy storage industry called for a reversal in the rise in VAT on home energy storage that was implemented in October 2019 to comply with an EU ruling, now that the UK can set its own rules on VAT, and in light of the economic pressures due to the pandemic.
“While there have been promising announcements and other technologies have rightly benefitted from grant schemes, there has so far been no dedicated support for energy storage devices despite the sector being hard hit as well,” the coalition said.
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The Government has admitted in a new report that tax revenues are at significant risk from the switch to electric vehicles (EVs).
Tax receipts, which are wholly dependent on individuals’ and businesses’ consumption of fossil fuels or emission of greenhouse gases, equated to £37 billion in 2019-20 or just over 4% of total revenues.
However, much of this revenue is likely to be “eroded during the transition to a net zero economy”, with the tax take “wholly or partially at risk”, it says.
The report says that the UK still needs to act to maintain the “sustainability” of public finances as it achieves net zero.
The Association for Renewable Energy and Clean Technology (REA) has urged the UK Treasury to examine the historic cost track record of renewables and clean technologies in studies of the investment required to hit the country s net-zero targets.
The call follows publication of the Treasury s interim report on the Net Zero Review, with the final report due to be published in Spring 2021.
REA chief executive Nina Skorupska said: “It is vital that we understand the benefits the UK’s path to net zero will have for our economy, as well as how we overcome the challenges along the way.
“We, therefore, welcome HM Treasury’s work in this area, as well as its recognition that the transition is essential to the UK’s long-term prosperity.