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Reduced VAT rate on energy-saving materials

Shared from Tax Insider: Reduced VAT rate on energy-saving materials
By Andrew Needham, March 2022

Andrew Needham looks at what energy-saving materials are subject to the 5% lower rate of VAT. 

The reduced rate of 5% applies to the installation of specific energy-saving materials. Unfortunately, wind and water turbines were removed from the list of qualifying items following the revised legislation, which took effect from 1 October 2019. However, insulation materials, solar panels, ground and air source heat pumps, and micro heat and power units remain qualifying if the conditions outlined below are met. 

The reduced rate applies whether or not the installation is grant-funded; and it includes the price of the goods themselves if certain conditions are fulfilled. 

Social policy conditions 

Installation services on their own are subject to the 5% reduced rate. In certain cases, the installation services and the energy-saving materials can fully benefit from the

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