Energy Saving & VAT

Are you aware of the deal on VAT and Energy Saving Materials?

Helping you with the cost of living

With the cost of living at the forefront in the news, we thought it would be useful to write about a tax break relating to measures to reduce your energy usage.

In the spring, the chancellor announced that with effect from 1^st April 2022, there is be a tax break for anyone installing energy-saving materials. The measure will last for 5 years.

The tax break is the removal of VAT from a charge by the installer of those goods. It was widely misunderstood that anybody could have saved VAT when purchasing materials and installing them themselves, but is only available when contracting with a commercial installer.

Remember this only changes the treatment for the installation to existing dwellings as the work will already what is termed zero-rated under the VAT legislation for new dwellings.

It does not include commercial buildings, as it would be anticipated that in many cases, the owner of the property is VAT registered and will be able to claim back the VAT in the normal course of business.

As usual, the devil is in the detail and there are detailed definitions for the properties that apply and the goods and services that qualify as energy-saving materials.

The list includes insulation, solar panels, and air source heat pumps as expected. But, it also includes controls for central heating and hot water systems.

So, if you are receiving services that could be installing energy-saving materials into your home, then it is worth checking with us to see if the working qualifies for the VAT reduction. Further, if you carry out repairs to houses then knowledge of the tax break may well mean the difference in price in order to win the work.