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VAT: Energy

Question for Treasury

UIN 30762, tabled on 17 March 2020

To ask the Chancellor of the Exchequer, what assessment his Department has made of the potential effect of removing VAT on energy efficiency products on encouraging the take up of those products.

Answered on

25 March 2020

Although the standard rate of VAT of 20% applies on energy saving materials, the Government allows a reduced rate of 5% of VAT on:

- all installations of energy saving materials for recipients who are aged 60 or over or on certain benefits, for housing associations, and where the installations are in buildings used for relevant residential purposes, and;

- on all other installations of energy saving materials in residential accommodation where the cost of the materials does not exceed 60% of the total cost of the installation.

It should be noted that if the value of the energy-saving materials exceeds 60%, then only the labour cost element will qualify for the reduced rate (with the supply of the materials being taxed at the standard rate).

Answered by

Treasury