VAT and Energy Saving Materials

Until 31 March 2027, the supply and installation of certain “energy saving materials” qualifies for 0% VAT when installed in residential accommodation. This VAT relief applies only to specific products when supplied and installed together.

Qualifying items include:

• Insulation for walls, floors, ceilings, roofs or lofts, and for water tanks, pipes or other plumbing fittings.
• Draught-proofing for windows or doors.
• Central heating system controls, including thermostatic radiator valves.
• Hot water system controls.
• Solar panels.
• Wind turbines.
• Water turbines.
• Ground, air and water source heat pumps.
• Micro combined heat and power units.
• Boilers fuelled solely by wood, straw or similar vegetal matter.
• Certain electrical storage batteries.
  Smart diverters.

However, problems frequently occur when qualifying energy-saving materials are installed as part of a broader project that also includes non-qualifying work. If both types of work are carried out by the same contractor under a single contract, the VAT relief is only available if the supply qualifies as a “single supply” of the qualifying items and their installation.

Where the installation of energy-saving materials is just one element of a wider project - the contract. The law does not permit apportionment between qualifying and non-qualifying elements in these cases.

To benefit from the 0% VAT rate, projects must be structured correctly from the outset. This applies to both contractors undertaking the work and property owners commissioning it.

The VAT People can advise on how to approach such projects to meet the relevant VAT conditions. Our team has extensive experience securing the correct VAT treatment for clients across the construction and energy efficiency sectors.

For professional advice on energy-saving material installation and VAT relief, contact The VAT People by calling our free helpline on 0161 477 6600.