The European Commission’s plans to give national governments “more autonomy” over how they set lower rates of value-added tax (VAT) “bode well” for solar panels keeping their current 5% rate, according to the Solar Trade Association (STA).

The trade body has been concerned that the UK Government could hike the VAT rate on solar installations from the current discounted 5% to the full 20%.

Energy Secretary Amber Rudd and Financial Secretary to the Treasury David Gauke have made “positive statements” about keeping the discounted rate for solar.

But the trade body wants their comments confirmed by the Treasury.

Oil, gas and electricity still at 5% VAT

Leonie Greene, Head of External Affairs for the STA, said: “The domestic solar market is undergoing challenging adjustments and both the industry and householders need to know that there will be no unfair increase in solar VAT.

“What we need now is a clear statement from Treasury to confirm the industry can count on the positive statements already given by Ministers.

“It would be a nonsense to impose VAT on solar at 20% while retaining 5% for grid electricity, gas and oil.”

> See the STA's statement