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VAT: energy-saving materials guidance

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HMRC has updated its guidance to clarify the application of the zero, reduced and standard rates of VAT for the installation of energy-saving materials in GB and NI following recent legislative changes. VAT Notice 708/6: Energy-saving materials and heating equipment covers the following Spring Statement changes to VATA 1994, as introduced by the Value Added Tax (Installation of Energy-Saving Materials) Order, SI 2022/361:

Great Britain: The new rules from 1 April 2022 remove both the social conditions test and the 60% test for all installations of qualifying energy-saving materials in England, Scotland and Wales. Wind and water turbines are also included in the list of energy-saving materials. The rules also introduce a temporary zero rate on all installations of qualifying energy-saving materials that are made on or after 1 April 2022 up to and including 31 March 2027. On 1 April 2027 the installation of qualifying energy-saving materials in Great Britain will revert to the reduced rate of 5%.

Northern Ireland: Northern Ireland remains broadly subject to the EU’s VAT rules in respect of goods (as a consequence of the Northern Ireland Protocol) meaning that the list of qualifying goods and rate of VAT due on installations remains unchanged.

Issue: 1572
Categories: News