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Energy: Housing

Question for Treasury

UIN 1006, tabled on 11 May 2022

To ask the Chancellor of the Exchequer, whether people who purchase energy saving products not through an installer will be covered by the VAT reduction.

Answered on

16 May 2022

At Spring Statement 2022, the Chancellor announced the expansion of the VAT relief for the installation of energy saving materials (ESMs) in Great Britain from 1 April 2022.

This relief will continue to apply to the installation of ESMs, rather than the direct purchase of the materials themselves. However, complex eligibility conditions, introduced in 2019 following an EU Court of Justice ruling, have been removed.

Further to this, wind and water turbines have been reinstated as materials which qualify for the relief, and all qualifying installations will also benefit from a VAT zero-rate until April 2027. Overall, this represents an additional £280 million of support for investment in ESMs over the next 5 years, building on the £9.7 billion that the Government has committed to invest since March 2021 to increase the energy efficiency and decarbonisation of our homes and buildings.

Targeting the VAT relief on professional installations ensures that the Government supports best practice in the choice and installation of ESMs. Going further would impose additional pressure on the public finances, to which VAT makes a significant contribution. VAT raised around £130 billion in 2019-20 and helps to fund key spending priorities. As you will know, any reduction in tax paid is a reduction in the money available to support important public services, including the NHS and policing.

Given this, although the Government keeps all taxes under review, there are no plans to further extend the VAT relief to direct purchases of ESMs.

Answered by

Treasury
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