There are special rules that govern when the installation of energy-saving materials and heating equipment is zero-rated or reduced-rated for VAT purposes.

HMRC has recently updated the applicable notice Energy-saving materials and heating equipment (VAT Notice 708/6). The notice has been updated to include guidance on the extension of the scope of the energy-saving materials relief to include installations in buildings used solely for relevant charitable purposes from 1 February 2024. The list of energy-saving materials has been extended to include, water source heat pumps, electrical battery storage and smart diverters. The supply of services and materials required to install a ground or water source heat pump (for residential accommodation or buildings used solely for relevant charitable purposes) are also eligible for the relief.

The notice cancels and replaces the previous version and is relevant to any contractor or subcontractor installing energy-saving materials or grant-funded heating equipment.

The notice includes sections on:

  • Installations of energy-saving materials.
  • Grant-funded installations of heating equipment and security goods.

Source: New feed