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Zero rate for energy-saving materials

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Spring Statement 2022 announced a time-limited zero rate of VAT for the installation of certain energy-saving materials (ESMs). The Value Added Tax (Installation of Energy-Saving Materials) Order, SI 2022/361, introduces the zero rate, meaning that installations of qualifying ESMs in England, Wales and Scotland will be zero-rated for a period of five years from 1 April 2022 until 31 March 2027. Wind and water turbines will also be permanently added to the list of qualifying ESMs.

The UK had been required to implement legislative changes in 2019 to comply with the European Commission. Consequently, reduced rating of installations of ESMs was limited to supplies that met certain social conditions or where the cost of the materials did not exceed 60% of the total value of the supply. The UK government is permanently reversing those 2019 changes.

Issue: 1570
Categories: News