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01 February 2024
Value Added Tax (Installation of Energy-Saving Materials) Order 2024

Synopsis

This order expands the zero rate of VAT for qualifying energy-saving materials to buildings used solely for relevant charitable purposes.

Further technologies are also added to the scheme, including water source heat pumps, qualifying electrical storage batteries and smart diverters.

Summary

The Value Added Tax (Installation of Energy-Saving Materials) Order 2024 will amend the Value Added Tax Act 1994 on 1 February 2024.

This legislation applies across the UK.

What will change?

The 2024 order expands the zero rate of VAT for qualifying energy-saving materials to buildings used solely for relevant charitable purposes.

The following materials and activities are added to the list of energy-saving materials qualifying for the zero rate of VAT:

  • Water source heat pumps;
  • Qualifying electrical storage batteries;
  • Smart diverters; and
  • Groundworks or dredging necessary to install pipework or other equipment for ground and water source heat pumps.

Reduced rate applicable from 1 April 2027

The zero rate of VAT will end on 31 March 2027. From this date a VAT rate of 5% will apply.

Definitions

Relevant charitable purpose: buildings used by a charity otherwise than for business purposes; or as a village hall or similar social or recreational facility for a local community.

Background

The Value Added Tax (Installation of Energy-Saving Materials) Order 2022 applied a temporary zero rate of VAT on the installation of qualifying energy-saving materials in residential accommodation until 31 March 2027.

 

 

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