UK government policy is intended to encourage homeowners to make their residences as environmentally friendly as possible. Policymakers have tools in their arsenal to encourage people to make the choices that will help facilitate the desired outcomes.

One of these tools is tax policy. Homeowners receive certain tax credits or can receive incentive payments for various ecologically sound actions. Here are some of the home improvements that you can make that will qualify you to receive compensation from the government in one way or another. Specifically, there are three UK government programs that are meant to encourage homeowners to “go green” with their home improvements.

One home improvement that can be made can not only act to reduce costs of homeownership, but it can also lead to an overall reduction in the global carbon footprint. A growing type of home improvement has been the installation of solar panels or wind turbines. Solar panels provide a source of power for the home as the light from the sun is harnessed to make electricity. Wind turbines are a newer technology that relies upon the wind as opposed to the sun. Both of these sources of power are renewable. Some solar panels and wind turbines can produce more power than the home needs for its own use. In that case, the government will pay homeowners for the power that is produced. This program is called “Feed-in Tariffs.” This is a home improvement that can actually pay you money. Homeowners will receive this payment, even if they use their own electricity. To the extent that extra power is produced and is exported into the power grid, there are extra bonus payment. What is better is that these payments are tax-free. Think of this as the home improvement that can practically pay for itself.

There is another set of credits that incentivize homeowners to make home improvements with energy-saving products. In addition to the payments for power that is produced by these systems, there is also a tax reduction to facilitate their purchase. The UK government has cut the Value Added Tax that is charged on the purchase of these products from 20 percent down to five percent, making them cheaper for homeowners to purchase. The list of these products includes panels, insulation and heat pumps. The VAT reduction even applies to the payment to the technicians that install these products. This tax discount is factored into the purchase price, and you need not apply for the tax credit. However, you should consider making these purchases sooner rather than later. The UK has been attempting to raise the VAT for some of these products and has been prevented from doing so by the EU. After Brexit, the UK government may attempt once more to change the policy.

Finally, there is a program that is related to the solar tax credit that encourages homeowners to install a geothermal heating system as a home improvement. This is a system that taps into the earth’s natural heat in the ground and brings it up to the surface to heat your home. While this system has large upfront costs, the government will ultimately subsidize these costs through incentive payments that it makes over the course of seven years. These payments depend in part on how much energy that you save through this system. While these incentives do not make this a free home improvement, the combination of the payments plus steep savings on energy bills makes this a home improvement that comes close to paying for itself over time. These heating systems are both cheaper and more efficient than the traditional heating systems that raise your electricity bill every winter.

Home improvements can both help lower your bills and improve the environment at the same time. You should consider taking advantage of what the government has to offer in deciding which system is right for you should you decide to make a home improvement.


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