Calls to cut VAT from household energy bills

Tuesday, 6 March 2012 9:16 AM

Consumers are calling for a helping hand from the government, by urging them to cut the VAT from energy bills.

A uSwitch survey has shown that 98 per cent of people want the Government to ease household finances by removing the VAT on energy bills, with 53 per cent saying they would use the additional money to keep warm in the winter.

Axing VAT on energy bills would save households an average of £60 a year, which when added to recent energy cuts would culminate to £100 in household savings. The move would see energy zero-rated for VAT, the same as water, taking 250,000 households out of fuel poverty and would be a start to offsetting the growing number of people rationing their energy and going cold through the winter.

According to HMRC, under EU agreements the UK can retain-zero rates that were put in place on January 1 1991, but new zero-rates cannot be introduced. Up until 1993 every UK household received zero-rate energy, but with this being signed away in the 1993 Budget the current Government would have a tough battle with the EU getting the zero-rate VAT reinstated.

Ann Robinson, Director of Consumer Policy at said the move to sign away zero-rate VAT was ‘short-sighted’.

“If the Government is serious about helping consumers it could pledge to use the VAT raised on household energy bills to make homes more energy efficient", she added.

A reported 19.5 million households have gone without heating at some point this year.

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