To help households improve energy efficiency and keep energy costs down – as well as supporting the country's long-term Net Zero ambitions – the UK government is extending the VAT relief available for the installation of energy saving materials (ESMs), from April 2022.
The Value Added Tax (Installation of Energy-Saving Materials) Order 2022 amendments are:
- The relief will no longer be restricted by the social policy conditions or the 60% test.
- Wind and water turbines will be added back to the list of ESMs.
- A temporary zero rate will be introduced with effect from 1 April 2022 until 31 March 2027.
- Unless the government introduces further legislation to extend the period of the zero rate, the installation of ESMs will revert back to the 5% reduced rate from 1 April 2027.