Solar installed for supermarket Lidl, which recently saw its business rates jump over 500%. Image: Lidl.
UK energy trade bodies – including the Solar Trade Association and Regen – are calling on the Treasury to implement tax relief for clean energy technologies.
In a letter sent to Chancellor Rishi Sunak, the trade bodies ask that the Treasury provides business rates relief for clean energy technologies that are playing a role in the transition to net zero.
This has been a contentious issue and an often-cited barrier to clean technologies, having been most recently thrown into the spotlight by supermarket chain Lidl, which saw its business rates increase by 528% due to changes in the valuation of solar installations at its sites.
However, business rates relief would only be a temporary measure, with the trade bodies also calling for the development of a fairer, more coherent system of business rates and VAT for renewables.
Alongside this, the Treasury should re-instate the VAT discount of 5% for energy saving materials and expand this definition to include storage, air-source heat pumps and EV charging infrastructure.
VAT on energy saving materials jumped from 5% to 20% in 2019 despite extensive opposition from the industry, with those such as the Committee on Climate Change and the MCS arguing against its implementation and the STA calling for storage to be allowed the 5% discount.
The measures recommended in the letter by the trade bodies would help to unlock clean energy projects that could add over £125 billion to the economy and provide 3 million job-years according to research from Regen.
The trade bodies to sign the letter are the Association for Decentralised Energy, Regen and the Electricity Storage Network, Energy UK, the Renewable Energy Association, RenewableUK and the Solar Trade Association.
Madeleine Greenhalgh, policy lead at Regen and the Electricity Storage Network, said: "The industry is constantly battling for fair business rates and the VAT increase last year was a blow for the small-scale solar and storage industries.
"Many have demonstrated the significant role that clean technologies have to play in the green recovery - providing temporary rates relief right now would demonstrate the government’s confidence in the industry and encourage shovel-ready projects and investors to come forward.”