Reduced VAT rate ― supplies of energy-saving materials

Produced by Tolley
Reduced VAT rate ― supplies of energy-saving materials

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Reduced VAT rate ― supplies of energy-saving materials
  • Energy-saving materials
  • What is residential accommodation?
  • What energy-saving products are included?
  • Damp proofing
  • What constitutes ‘installation’?
  • Changes to the scope of the reduced rate for energy-saving materials
  • Background
  • 2019 changes
  • Installing energy-saving materials with ancillary supplies
  • More...

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point intime, key transitional arrangements came to an end and significant changes began to take effect across the UK’s VAT and customs regime. This document contains guidance on subjects potentially impacted by these changes. Before continuing your research, see the Brexit — overview guidance note.

Businesses involved with advising contractors or subcontractors installing energy-saving materials, grant-funded heating equipment or security goods will find this guidance note of particular interest as it outlines the main rules regarding the supply of installed qualifying goods at the reduced VAT rate.

Energy-saving materials

In order to determine whether the supply will be liable to VAT at the reduced rate, the following questions need to be answered:

  1. pre-1 October 2019, are the energy-saving materials going to be installed inexisting residential accommodation? (A building used for a relevant charitable purpose no longer applies since 1 August 2013)

  2. post-1 October 2019, are the energy-saving materials going to be installed for a qualifying person or organisation ina qualifying building or is the 60% test satisfied?

  3. do the materials to be installed qualify for the reduced VAT rate? Full details of the materials included within the reduced VAT rate are below

  4. are the materials installed by the person supplying the energy-saving materials?

VENSAV3000; VATA 1994, Sch 7A, Group 2, Note 1(a)–(k)

Note that if these items are installed ina new dwelling, the installed materials will most likely be zero-rated as part of a new construction of a zero-rated dwelling. See the Construction ― zero-rating of construction services and Buildings and construction ― building materials guidance notes.

What is residential accommodation?

Below is an overview of the types of accommodation where it is possible for energy-saving products to be supplied and installed at the reduced VAT rate.

Residential accommodation can be described as:

  1. houses, flats and

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