UK green industry leaders call on Boris Johnson for VAT tax break

LaToya Harding
·Contributor
·3 min read
British Prime Minister Boris Johnson attends a conference about the COP26 UN Climate Summit, in London, Britain February 4, 2020. Jeremy Selwyn/Pool via REUTERS
Business leaders called for the UK to extend VAT exemption to electric vehicles (EVs) and associated charging technology, heat pumps, energy storage devices including heat batteries, solar panels, secondary or double glazing, low-carbon boilers and white goods, as well as insulation and other energy efficiency fittings. Photo: Jeremy Selwyn/Pool via REUTERS

Leaders of UK "cleantech" businesses have written an open letter to prime minister Boris Johnson, urging him to make green products more affordable by reducing the rate of VAT charged on them to zero.

The move, which is now possible due to the UK’s departure from the European Union (EU), would make green technology cheaper for millions of British households, the letter said.

Business leaders called for the UK to extend VAT exemption to electric vehicles (EVs) and associated charging technology, heat pumps, energy storage devices including heat batteries, solar panels, secondary or double glazing, low-carbon boilers and white goods, as well as insulation and other energy efficiency fittings.

Many of these products are currently levied at the full 20% VAT rate.

The green industry bosses added that they were “disappointed” at the lack of government policies to help people play a part in reaching net zero, highlighting that there is a risk families will be “priced out of the switch to green technology” due to the Green Home Grant closing and grants for EVs reducing.

Some of the companies behind the open letter include Bulb Energy, Arrival, Citizens Advice, Ecotricity, Moxia, the People's Energy Company.

Britain has vowed to cut emissions by 68% of its 1990 levels by 2030. It has also banned the sale of new petrol and diesel cars by 2030 - five years earlier than planned.

The move is not expected to apply to some hybrid cars which use a mixture of electric and fossil fuel propulsion, which could still be sold until 2035.

READ MORE: UK expected to ban new petrol and diesel cars from 2030

“Families shouldn’t be taxed for choosing green options, and low-carbon technology must be affordable for everyone,” the letter said. “Scrapping VAT on green products will boost consumer spending in green technologies, stimulate growth and create highly-skilled green jobs in all four corners of the UK.”

It added: “For example, cutting VAT would reduce the cost of a Renault (RNO.PA) Zoe, a mass-market pure EV, by over £4,500 ($3,274), making it more affordable for drivers to switch away from petrol and diesel vehicles ahead of the 2030 ban.

“The UK needs to make 2,000 homes carbon neutral every day for the next 11,000 days to achieve net zero by 2050. Scrapping VAT on green products would ensure no-one’s left behind in the race to net zero.”

In February, the Environmental Audit Committee also urged the UK government to remove VAT on green home improvements, and during March’s 2021 budget, chancellor Rishi Sunak set out plans to invest in green infrastructure across the country.

READ MORE: UK tech firms join forces to tackle climate crisis and accelerate towards net zero

It comes ahead of COP26, the UN climate conference, held in Glasgow later this year.

The COP26 conference, which is being held between 1 and 12 November, will be the largest summit the UK has ever hosted. It will have dozens of world leaders in attendance and bring together representatives from nearly 200 countries, including experts and campaigners.

It was originally scheduled for November 2020 but was delayed by a year due to the coronavirus pandemic. It will be the largest summit that the UK has ever chaired and has been described as the most significant climate event since the global Paris Agreement was secured in 2015.

In January, Alok Sharma resigned from his role as UK business minister in order to lead the United Nations COP26 climate change summit.

Sharma, who is president of this year’s climate summit, told Boris Johnson that he would rather give up his position as business secretary than leave his role in the climate change envoy.

WATCH: Climate change: COP26 conference 'last, best opportunity to get real'