Chancellor urged to defer VAT on energy bills

The Chancellor is being urged to drop VAT on energy bills during the coronavirus crisis.

The Chancellor is being urged to help people with fuel bill rises.

A cross-party letter, led by Liberal Democrat MP Jamie Stone, calls for a moratorium on the tax as it is expected that bills will soar as people stay at home.

Yesterday, figures from Uswitch forecast that households could see bills increase as much as £195 by following government restrictions.

Mr Stone, who represents Caithness, Sutherland and Easter Ross, said: "Right across the UK people are desperately worried about how they will make ends meet in the face of this crisis. Many already find themselves out of work, on reduced pay or having to rely on Universal Credit. Ensuring people using prepaid meters are not cut off is a first step, but there are many who will need further assistance.

"The very least the government can do is offer people a break from VAT on energy bills - this would be a quick and effective step which will immediately assist some of the poorest in our society. It will at least partly alleviate the additional financial pressure created by the need to stay at home."

The letter welcomes the government decision to defer VAT for businesses until June 30, but urges the Chancellor, Rishi Sunak, to do the same for energy customers.

It states: “Given that most of us are spending a lot more time at home self-isolating, there is no doubt that our energy bills will dramatically increase.

“For many people in the UK, some of whom are hard hit by fuel poverty, a VAT moratorium on electricity bills would be a huge help in the weeks and months ahead.

“You have already helped more than four million people on prepayment meters by ensuring suppliers offer them funding support if they cannot top up their meters. As more and more people now self-isolate, it is important that we extend this kind of help, especially to those on the poverty line.

“A VAT moratorium would be the most simple way of negating the inevitable increase in energy bills whilst we self-isolate to avoid spreading the virus.”