Vast majority back call to scrap heating oil VAT

6 March 2012

Posted by Bob Burton

Almost all the British public would be in favour of a move to eliminate VAT from heating oil and other domestic energy supplies, a new poll has found.

Research conducted by uSwitch revealed 98 per cent of people want the government to remove the tax in order to help ease the squeeze on household finances in the UK.

More than four-fifths of respondents to the organisation's poll said energy should be considered as essential a utility as water, so should be treated the same for VAT.

BoilerJuice is one organisation backing the call to remove VAT on home heating oil supplies and has created an e-petition urging the government to take action.

It was noted by uSwitch that removing the levy could be a vital lifeline to the 19.5 million households who have had to go without warmth at some point this winter in order to keep their fuel bills to a minimum.

The survey found 47 per cent of householders would be able to stop rationing their energy use as a result of a VAT cut, while 52 per cent stated they would use the extra money to help keep warm in the colder months of the year.

However, uSwitch warned cutting VAT on energy bills may not be straightforward, as EU law states the UK cannot introduce new zero-rate VAT levies, though it can retain those that were in place before 1991.

Although domestic energy was previously zero-rate, the UK signed away this right in the 1993 Budget, a move described by director of consumer policy at uSwitch Ann Robinson as "short-sighted".

Therefore, she suggested the government may have to face a legal fight with the EU in order to implement such a policy.

However, Ms Robinson added that even if the government is not prepared to take up such a fight with the EU, there are still steps it can take to tackle the high cost of energy in the UK, such as pledging to use VAT raised through fuel bills to help make homes more energy efficient.

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