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Potential Increase In VAT On Green Technology


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#1 Alphonsox

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Posted 05 June 2015 - 07:48 AM

Apparently the European Court of Justice doesn't like our 5% VAT rate and wants it upped to 20%.

http://www.telegraph...s-EU-rules.html

The could effect everything from insulation to heat pumps.

https://www.gov.uk/r...ds-and-services

Absolutely insane

#2 ProDave

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Posted 05 June 2015 - 07:49 AM

I presume whatever the VAT rate, it will still be zero rated for new builds?

#3 temp

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Posted 05 June 2015 - 07:57 AM

Some counteries like Belgium have VAT on new houses.

#4 jsharris

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Posted 05 June 2015 - 07:58 AM

My guess is that this is related to some of the nonsense that's been going on in places like Spain and France. I think that in Spain you now get charged for the electricity you generate with your own solar panels, for example, and the situation in France is heading that way.

Zero rating for new builds is almost certainly under threat already, as other EU states don't zero rate new houses and there has been pressure for some time from the EU for the UK to reduce the number of lower rate, or zero rate, items.

It's interference by the EU like this that really annoys me. What right does a European parliament have to over-ride our own elected government? I sincerely hope that this government sorts out the dominance of EU laws and regulations over UK laws and regulations, or else I suspect there will be more people shifting to the UKIP position over the EU.

#5 ProDave

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Posted 05 June 2015 - 08:02 AM

I agree. More ammunition to vote "out" of the EU, or at least this is the sort of thing DC should be re negotiating to bring back under UK control before offering a revised membership deal to us.

#6 SteamyTea

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Posted 05 June 2015 - 08:19 AM

I am not going to get into a Pro or Anti EU discussion (my views are well understood)

Most manufacturers/suppliers could absorb this type of increase no problem, and the ones that can't should not be in that market anyway.

It is strange how we want both low taxes on insulation and fuel prices. Why not put 20% VAT on fuel prices and 0% rate insulation/energy saving products as an incentive, or the other way around, if we feel like doing nothing.
All depend is you like inflation or not. We tend to have forgotten what inflation can be like, we tend to see just the down sides of low saving rates (which are there to promote liquidity in the money markets).

#7 joiner

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Posted 05 June 2015 - 08:24 AM

Not working though, is it! ;)

2017 will certainly be an "interesting" year. :rolleyes:

#8 SteamyTea

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Posted 05 June 2015 - 08:31 AM

No it won't, it will be dull and boring and the EU parliament will keep us in. We are voting on the wrong grounds, just like Scotland did.

#9 jsharris

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Posted 05 June 2015 - 09:20 AM

I'd be very much in favour of increasing the price of energy supplies overall, and reducing the price of true energy saving measures. It's unlikely to happen, as it would be massively unpopular, but there is nothing like a price incentive when trying to change behaviour (anyone who doubts this just needs to look at the overall effect of fuel pricing on car development - the market has demanded more economical cars).

Energy for heating homes is far too cheap for most people, so there is little incentive to undertake any serious energy conservation measures, plus we have the unfair situation where those in "energy poverty" live in some of the least energy-efficient homes and have little money to spend on even subsidised energy-saving measures.

#10 hoss

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Posted 05 June 2015 - 09:31 AM

Have one tax, Land Value Rental, make the bureaucrats redundant.

#11 notnickclegg

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Posted 05 June 2015 - 09:47 AM

View Posthoss, on 05 June 2015 - 09:31 AM, said:

Have one tax, Land Value Rental, make the bureaucrats redundant.

It'll never happen, because no government is brave enough to go through the upheaval and revaluation that would take place over several years.

Shame really, as it has a huge number of positives.

Jack

Edited by notnickclegg, 05 June 2015 - 09:48 AM.


#12 Mackers

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Posted 05 June 2015 - 10:34 AM

Its all complete nonsense as usual. Its hard to believe how Spain can charge people for their own electricity they produce. How does that encourage the uptake of renewables?

#13 jsharris

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Posted 05 June 2015 - 10:53 AM

View PostMackers, on 05 June 2015 - 10:34 AM, said:

Its all complete nonsense as usual. Its hard to believe how Spain can charge people for their own electricity they produce. How does that encourage the uptake of renewables?


I understand that it's a measure to try and generate tax revenue in order to help Spain get out of it's debt problems.

It's incredibly stupid, because a substantial amount of electricity in Spain is used for air cooling, and PV is a good match for this (as I'm finding - my active MVHR runs entirely from PV when in cooling mode).

#14 stones

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Posted 05 June 2015 - 03:40 PM

I'm sure the treasury would love to apply 20% VAT to everything, regardless of what the EU says. It is the Treasury's money after all! :ph34r:

Politicians, do however live in a world where they are well aware of the problems and unintended consequences of altering the VAT rate (especially on those items that are currently zero rated). Remember the mess they got into over the 'pasty tax'? Most of the reductions or exemptions that are left are I think politically very difficult to reverse (applying VAT to children's clothes and babyfood for instance).

Applying VAT to new build would undoubtedly hit the building industry and of course self builders. I personally can't see the government wanting to do anything that would further reduce the level of house building in the UK, or hit the UK economy (given the large part the construction plays). The last consultation from the EU on this subject was in 2012 I think. Given that the UK has embarked on a re-negotiation of its membership of the EU, I wouldn't anticipate much movement on subjects like this until after the referendum.

#15 NeilW

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Posted 05 June 2015 - 03:49 PM

"What right does a European parliament have to over-ride our own elected government?"

They don't. But our parliament enacted the European Communities Act 1972 with some broad reaching provisions that overrides other laws.

So in technical terms the UK parliament is overriding itself.

#16 stones

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Posted 05 June 2015 - 03:54 PM

The UK can of course dig its heels in, as it is doing to some extent with the issue of Prisoner Voting rights. Expect a bit more of this over the next 18 months.

#17 temp

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Posted 05 June 2015 - 04:09 PM

VAT is meant to be roughly similar across the EU to prevent companies in one state having an unfair advantage. So are many UK solar panel suppliers making a killing across the channel?


#18 NeilW

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Posted 05 June 2015 - 04:31 PM

Call me an old cynic, but this seems rather convenient since it means that 'Dave' can go over to Brussels, bang the desk and act tough while the Euro lot recoil in fake horror and say 'Go on then'.

The result is nothing actually changes, but it looks like a significant 'renegotiation'.

#19 jsharris

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Posted 05 June 2015 - 06:07 PM

View PostNeilW, on 05 June 2015 - 04:31 PM, said:

Call me an old cynic, but this seems rather convenient since it means that 'Dave' can go over to Brussels, bang the desk and act tough while the Euro lot recoil in fake horror and say 'Go on then'.

The result is nothing actually changes, but it looks like a significant 'renegotiation'.

I'm inclined to agree. Many (perhaps most) of the 5% rated renewable energy materials are imported, rather than exported, and a fair few probably come from other EU states, so there is a trade advantage to those states in the UK retaining the 5% rate. Germany, in particular, probably gains most of all from this, as I believe quite a lot of PV materials come from Germany. A lot of heat pumps also come from other EU states, as well as a lot coming from the Far East. AFAIK, there is only one domestic heat pump manufacturer in the UK, all the others are re-badged products from elsewhere (for example my Glowworm ASHP is identical to a Kingspan Aeromax ASHP and both appear to be made in Italy, with some German components).

#20 stones

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Posted 06 June 2015 - 04:35 PM

That's the funny thing about the EU - we are not the only ones who roll our eyes at some of the dictats and plans coming out of the EU bureaucracy, but we do seem to be the country that implements most of what is spewed out of Brussels. The French seem to have a more sensible approach, implementing what will work for them and largely ignoring what won't, treating it more as 'guidance'. Many other countries in the EU probably welcome the UK 'renegotiation' as they probably what some change themselves. A lot easier to make the UK the bad guy...