Measure

VAT relief on energy-saving materials

The measure

Following a call for evidence, the government has announced that the VAT zero rate that applies to the installation of energy-saving materials will be extended to additional technologies, such as water-source heat pumps, and to include buildings intended solely for a relevant charitable purpose. 

 

Who will be affected?

Households and certain other taxpayers in the UK that install energy-saving materials. The measure will apply UK-wide, including Northern Ireland, as a result of the Windsor Framework.

 

When will the measure come into effect?

It was announced that the implementation date will be 1 February 2024 and that the zero rate will revert to the reduced rate of VAT on 1 April 2027.

Our view

The measure should reduce the VAT burden borne by households and certain other taxpayers installing energy-saving materials and in general is a welcome development in line with the wider net zero agenda.