Question to the HM Treasury:
To ask the Chancellor of the Exchequer, pursuant to the Answer 28 February 2022 to Question 125532, on Energy: VAT, what assessment his Department has made of the amount by which (a) VAT and (b) fuel consumption will reduce as a result of the increase in fuel prices.
As set out in the answers to PQ UIN 125532 and PQ UIN 129256, high energy prices reduce VAT revenues.
In recognition that families should not have to bear all the VAT costs they incur to meet their energy needs, domestic fuels such as heating oil, gas and electricity are subject to the reduced rate of 5 per cent of VAT. If people spend more on domestic fuels where VAT is 5 per cent, they spend less on goods and services that on average have a much higher VAT rate, thereby reducing VAT revenue overall.