0% VAT on Solar and Heat Pumps Explained

On the 23rd March 2022 the Chancellor Rishi Sunak announced in his Spring Statement a cut to VAT on energy efficiency materials, including solar panels, heat pumps, and insulation. These items will have zero VAT for five years, starting from 1st April 2022.

This is an exciting policy as it should encourage a broader uptake of renewable energy systems from the UK public.

What does this mean for Midsummer customers?

The VAT is on the cost of the installation of these items. Installers will continue to pay 20% VAT on goods purchased from Midsummer and only charge the end customer 0% VAT, then reclaim it in their VAT return - just as they did before with the difference between the previous 5% rate and the 20% VAT we charge on products. 

The VAT cut is designed to benefit the consumer, and drive demand for renewable technologies. We are already hearing feedback from customers that their phones are ringing non-stop (and it was already a busy time) so we can expect it to be a very busy year indeed. 

What about batteries?

The situation with batteries remains the same as when the VAT rate was at 5% for solar installations - for more detail please see this Solar Energy UK article. (Note that it was written before the 0% rate came in, so references 5% but the principles are the same).

Easy PV has been updated to reflect the new default VAT rate. Don't forget, installers can use it to set their pricing to their customers, and generate a quote for them within the software. 

Heatpunk (our heat pump sizing and heat loss calculation software) will be updated too. 

This will certainly make things busier for the industry. It's busy at Midsummer already, and we have a number of positions open as we continue to grow. See the roles at midsummerwholesale.co.uk/jobs.