The Spring Statement is an annual statement made by the Chancellor of the Exchequer to the House of Commons, providing an update on the health of the economy, forecasts and progress made since the Autumn Budget.
Against the backdrop of escalating energy costs, surging inflation and Russia’s invasion of Ukraine, last week Chancellor Rishi Sunak made announcements about National Insurance thresholds, fuel duty, business rates and VAT relief on low carbon technologies. But how much money can you now save with low carbon heating?
A key announcement for homeowners was the decision that VAT on buying and installing home energy-saving materials technologies such as insulation, solar panels and heat pumps will be cut from 5% to zero.
Along with residential solar, commercial and industrial solar received a boost as changes to business rates relief for green technologies are being brought forwards by a year to support SMEs amid high power prices. In Sunak’s budget in October 2021, he originally announced that there would be no business rates on a range of green technologies, including solar panels and batteries, from April 2023.
The changes start from April 2022 and run for the next five years, making it more affordable for households to install energy-saving materials (ESMs).
Instead of April 2023, business rates relief will now come into effect in April 2022, as well as eligible heat networks now also receiving 100% relief.
According to the Spring Statement 2022, a typical family with solar panels installed will save more than £1,000 in total on installation, and then £300 on their annual energy bills.
With the average cost of an air-source heat pump for a three-bedroom detached house around £8,000 to £10,000, that’s an immediate saving of £400-£500. That may not be much of an incentive, but when combined with the Boiler Upgrade Scheme, which offers £5,000 grants towards low-carbon heating from April 2022, 0% VAT on energy-saving measures is a step in the right direction.
According to the government, the business rate relief measures will collectively save businesses more than £200 million over the next five years and will move us a little closer to becoming a net-zero economy.
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