Building merchants have warned that the VAT hike by the EU Directive is threatening to hinder the success of the Green Deal and suppress the market for building materials.
The European Commission has told the Government to amend UK legislation which allows a reduced VAT rate for the supply and installation of energy-saving materials such as insulation. Brussels believes that the current 5% rate levied on these materials is illegal, and if the Government does not change British law within two months, the Commission may refer the matter to the European Court of Justice.
Builders Merchants Federation Policy Manager, Brett Amphlett stated that the EU directive could undermine the Green Deal because any increase in the cost of energy efficiency materials would affect the Green Deal’s “Golden Rule,” which specifies that the cost of measures must not exceed the savings gained through the energy bills over 25 years.
Furthermore, Amphlett said that the BMF has been lobbying the government to extend the 5% VAT rate to all Green Deal measures in a bid to increase the take-up of the policy. The BMF believes that the EU directive could be disastrous for the government’s energy efficiency programme and the ruling will have major implications for the Green Deal.
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