Spring Budget Review on VAT reduction and Q-Bot
Chancellor Rishi Sunak announced last Wednesday that VAT for energy efficiency measures will be scrapped to help tackle the unprecedented rise in energy prices, reflected in consumers’ next gas and electricity bills. From the 1st of April 2022, homeowners will no longer pay VAT to install solar panels, heat pumps or insulation in their homes.
The UK Government intends to encourage homeowners to upgrade the thermal efficiency of their houses and reduce their energy bills by installing environmentally friendly energy solutions. The change will be effective for a period of 5 years and will then revert to what was previously charged, a reduced VAT rate of 5%.
The Chancellor said: “As energy costs rise, we know that energy efficiency will make a big difference to bills. But [if] homeowners want to install energy-saving materials, at the moment only some items qualify for a five per cent VAT relief and there are complex rules about who is eligible.
The relief used to be more generous but from 2019 the European Court of Justice required us to restrict its eligibility. But thanks to Brexit we're no longer constrained by EU law so I can announce that for the next five years homeowners having materials like heat pumps, solar panels or insulation installed will no longer pay five per cent VAT they will pay zero.”
What does insulation mean for your home?
Retrofitting a home has many benefits: it saves money on energy bills (gas and electricity), improves daily comfort, reduces carbon footprint, and increases the value of a property. This also means a healthier and warmer home to live in, without mentioning the positive impact on climate change.
Homeowners will need to understand what measure to install first that suits them best (and their house) in terms of cost, level of disruption, and most importantly, savings and comfort. Insulation is an important part of creating a warm and energy efficient home. In fact, up to 20% of heat is lost through your floors due to the lack of insulation. Underfloor insulation is usually a forgotten measure due the disruption of installation and cost involved.
Q-Bot’s underfloor insulation makes homes warmer by reducing, on average, cold draughts by 30% and heat loss through the floor by 70%. Q-Bot uses intelligent robots that go under the floor, to spray insulation under floorboards. The installation is completed with minimal disruption and saves on average £260 a year on energy bills (rate as of April 2022). Installing Q-Bot’s underfloor insulation in a 50m2 house will see homeowners save a further £250 as a result of the removal of VAT.
“The triple whammy of rising energy costs, energy security concerns and harm to environment from burning fossil fuel have impacted us all. Removing VAT on the installation of energy efficiency measures is a really helpful incentive for anyone considering installing solar panels, a heat pump, roof or underfloor thermal insulation.” Peter Childs, FREng, Energy Futures Lab, Imperial College London
Read more about best way to insulate your home