Builders Merchants Journal – BMJ Publishing to Builders Merchants and the UK merchanting industry for more than 95 years
The Government is to keep the current reduced rate of Value-Added Tax on the supply and professional installation of energy-saving materials despite losing a European court case last year. The Builders Merchants’ Federation has welcomed the news.
The Prime Minister told the House of Commons that his Government will not oppose a move by Conservative MPs – acting with the Labour Party – to stop VAT on insulation, heating & hot water system controls, heat pumps, and solar panels being levied at the 20% standard rate.
Since June 2012, the BMF has lobbied to keep 5% VAT on energy-saving materials defined in eleven product categories under EU law. On several occasions, Brett Amphlett, BMF Policy & Public Affairs’ Manager has raised it in person with politicians – including twice with the Prime Minister and twice with the Financial Secretary to the Treasury, David Gauke MP, the minister with day-to-day responsibility for VAT.
In June 2012, the European Commission told the UK Government to amend the law to elevate VAT charged on insulation, heating & hot water system controls, heat pumps, and solar panels to the 20% standard rate. Brussels said the current 5% rate was illegal and in June 2015, the European Commission won a case in the Court of Justice. There is no further right of appeal.
A three-and-a-half year BMF lobbying campaign to keep existing tax relief took a final twist this week when the Labour Party put down amendments to the Government’s Finance Bill to prevent the existing rate going up from 5% to 20% – a 400% increase. Faced with a defeat if it had gone to a vote, ministers climbed down and agreed to allow their own legislation to be amended by the Opposition to give the Treasury the power to resist the EU VAT rules.
, commented:
“We are very pleased the Government will keep the reduced rate on materials and products that BMF members distribute. This is a significant victory for the BMF. I was in Parliament yesterday to keep up efforts in favour of 5% on the day MPs voted on George Osborne’s amended Budget”.
“Now the legislation has been passed, improvements can continue to enjoy the 5% rate to make homes warmer, cut bills and save money. That is good news for merchants, manufacturers, solar panel installers and insulation contractors”.
