Budget 2021: Rishi Sunak faces calls to use Brexit freedoms to axe VAT

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Scrapping the tax would help encourage the take-up of zero-carbon initiatives such as insulating properties and installing solar panels, a report said. The review for the MCS Charitable Foundation slammed the existence of a “perverse incentive” to demolish and rebuild. It urged the Government to use its independence from the EU to set its own VAT rates. David Cowdrey, MCS Foundation director of external affairs, said: “The current VAT rules for energy efficiency measures and domestic renewables are extremely complex, making people pay up to 20 percent in VAT.

“Now we have left the EU, it is time for the Chancellor to reform and simplify the VAT system and introduce a zero rate of VAT for all domestic renewables, energy efficiency measures and eco-retrofitting.

“It will really help people to decarbonise their homes. Rather than slapping people with an extra 20 percent.

“Now the UK can set our own VAT rules, we should zero rate VAT on all domestic renewables.” 

The report, compiled by tax specialists MHA Tait Walker, said: “Existing VAT regulations act as a barrier to retrofitting our homes.

“The additional cost of VAT is discouraging the installation of energy efficiency measures and domestic renewable technologies at precisely the time we need to be kickstarting the retrofit revolution.”

The Daily Express Zero For Zero ­campaign, launched with eco entrepreneur Dale Vince, has highlighted how VAT acts as a barrier to going green. The Express is calling for zero VAT on products with zero or near zero emissions, as part of our Green Britain Needs You crusade.

Retrofitting homes carries 20 percent VAT, whereas demolishing homes and building new ones is zero-rated. The report was released ahead of tomorrow’s Autumn Budget, and with the COP26 climate summit in Glasgow only a week way.

  • Sign our Zero For Zero petition at express.co.uk/greenpetition

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