The Chancellor said in his Spring Statement that homeowners having solar panels, electric heat pumps and insulation installed over the next five years would not have to pay the tax. But the policy will not immediately apply to Northern Ireland because of what Mr Sunak described as “deficiencies” in the protocol.
He pledged that the Government will raise the issue with the European Commission as a matter of urgency and support would be offered.
His announcement led to fury on social media with Baroness Kate Hoey tweeting: “Not good enough that because of the Protocol Northern Ireland cannot have the [benefit] of zero VAT. “
She urged Foreign Secretary Liz Truss to say “enough is enough” and called on the Government to “ignore the EU” and bring Northern Ireland in line with rest of the UK.
A second Twitter, @timothyferres, fumed: “Almost incredible that HMG needs the consent of the EU for legislation in a part of the UK. Not acceptable, and discriminatory.”
@ Janetha16654741 chimed in: “We are part of Britain and we should be able to cut out [VAT] on fuel ignore the EU and invoke Article 16 as it’s not working. “
Fellow Twitter user @ philpool1 said: “Article 16 now. Bring the NI people back into the family.”
Mr Sunak told the Commons that the EU had blocked the UK from scrapping VAT on green energy-saving measures while it was a part of the bloc.
He said: “As energy costs rise, we know that energy efficiency will make a big difference to bills.
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“But if homeowners want to install energy-saving materials, at the moment, only some items qualify for a five percent VAT relief and there are complex rules about who is eligible.
“The relief used to be more generous but from 2019 the European Court of Justice required us to restrict its eligibility.
“But thanks to Brexit we’re no longer constrained by EU law so I can announce for the next five years homeowners having material like solar panels, heat pumps, or insulation installed will no longer pay five percent VAT, they will pay zero.”
It means a household installing solar panels would see tax savings up to £ 1,000, according to the Chancellor.
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Red tape introduced after the UK left the EU as part of the Northern Ireland Protocol and means the province is still subject to the bloc’s tax rules.
They are therefore still required to abide by the European Court of Justice’s ruling on green energy measures.
Mr Sunak said the policy highlighted the deficiencies in the protocol because the measure will not immediately be applied to Northern Ireland.
He added: “But we will be raising it with the Commission as a matter of urgency.”
DUP North Antrim MP Ian Paisley commended the Chancellor for his “honest” assessment of the protocol.
He said: “The Chancellor is offering tax breaks for people to make their home more energy efficient, and the protocol is standing in the standing in the way. The Protocol is standing in the way of helping make our environment cleaner and household budgets go further .
“It is ridiculous that the Government of the United Kingdom is having to seek permission from people not elected by anyone in the UK to give tax breaks to UK citizens.
“The DUP will use its influence in Westminster to get a better deal for Northern Ireland but its about time some other parties in Northern Ireland added their influence to remove this protocol and get a better deal for hard pressed Northern Ireland households.”
While the protocol was agreed by Boris Johnson in 2019, the Prime Minister has since warned it is having a detrimental impact on the UK.
Ministers want to renegotiate its terms to make sure it is sustainable in the longer run.
Article 16 allows either the UK or EU to undertake unilateral safeguarding measures if the protocol leads to serious economic, social or environmental difficulties.