At the Spring Statement 2022, the government announced changes to expand the VAT energy saving materials relief in Great Britain.
The installation of certain energy saving materials (ESMs) in residential accommodation benefits from a VAT relief, supporting households to improve the energy efficiency of their homes by reducing or removing VAT due on installations of qualifying materials.
HMRC now seek views on two further potential areas of reform for this relief. Per the introduction to the consultation document Call for evidence: VAT energy saving materials relief – improving energy efficiency and reducing carbon emissions these areas are:
“Firstly, this call for evidence seeks views on the inclusion of additional technologies that meet the government’s objectives for the relief.
Since the introduction of the relief in 1998, the list of qualifying technologies has grown from insulation and central heating and hot water system controls, to include solar panels, wind and water turbines, ground and air source heat pumps, micro combined heat and power units, and wood-fuelled boilers. However, since 2006, the list has remained the same with the exception of wind and water turbines, which were excluded in 2019, but reintroduced in Great Britain in 2022, and, subject to the ratification of the Windsor Framework, will be reintroduced in Northern Ireland in 2023 . The government is now considering whether the current list (see Annex B) of qualifying materials is up to date, thus ensuring that the relief is as effective as possible.
Secondly, this call for evidence seeks views on whether the relief should be re-introduced for installations of ESMs in buildings intended solely for a relevant charitable purpose.
Prior to 2013, UK legislation provided a VAT relief for ESM installations to charitable premises. However, this was withdrawn in 2013 following discussions with the European Commission, which asserted that this approach was not consistent with European Union (EU) law. As the UK has now left the EU, the government can consider reinstating this relief.”
HM Revenue and Customs and HM Treasury welcome discussions with interested parties.
The consultation closes at 11:45pm on 31 May 2023.