A cross-party group of MPs and industry representatives has urged the UK Government to include heat batteries in the Energy Saving Materials (ESM) VAT relief scheme.
In a letter to James Murray MP, Exchequer Secretary to the Treasury, they argue that this move would support the UK’s home decarbonisation efforts and offer more affordable heating options to households.
Currently, VAT relief under the ESM scheme is limited to certain low carbon technologies, mainly heat pumps.
However, not all homes can accommodate heat pumps due to space constraints or a lack of suitable local heat networks.
Heat batteries, which use existing home infrastructure and offer lower running costs compared to electric boilers, could be a practical alternative.
The letter highlights that heat batteries missed out on ESM status in Autumn 2023 due to definitional issues, despite strong support from officials in the Department for Energy Security and Net Zero (DESNZ).
Discussions between DESNZ, HM Treasury and HM Revenue and Customs have been ongoing, but the ESM relief has yet to be expanded.
The letter is signed by MPs such as Afzal Khan and Ben Lake and peers including Baroness Brown and Lord Storey.
Industry supporters, including Centrica New Business and Net Zero, OVO and E.ON, have also endorsed the call for broader VAT relief.
They argue that extending VAT relief to heat batteries would particularly benefit smaller, low income households and support the UK’s climate targets.
Tom Pakenham, Commercial Director, Centrica New Business and Net Zero commented: “Providing VAT relief on a whole range of low carbon technology will give homeowners more choice on the solutions that will help to decarbonise their homes.”
Afzal Khan, Labour MP for Manchester Rusholme, said: “I know first-hand from my constituents in Manchester Rusholme the devastating impacts high energy bills are having on low-income households as thousands are driven into fuel poverty every year and so many people are still wondering how they are going to make ends meet.
“This is why I support proposals to extend ESM status to heat batteries which, under the right policy framework, will save low income households hundreds of pounds per year and get Britain back on track to meeting our climate targets.”
