Reply To: 5% VAT supplies of insulation for roofs

Forum Categories GENERAL VAT DISCUSSIONS 5% VAT supplies of insulation for roofs Reply To: 5% VAT supplies of insulation for roofs

#55911
VAT-adviser
Member

Firstly, the reduced rate only applies to supplies of energy-saving materials made by installers, not to purchases by a business or for DIY use. Also, note the reduced rate has been removed from supplies of energy-saving materials for use in charitable buildings from 1 August 2013.

The best starting point is https://www.legislation.gov.uk/ukpga/1994/23/schedule/7A?view=plain schedule 7A Group 2  — Installation of energy-saving materials Supplies of services of installing energy-saving materials in residential accommodation; which lists all the supplies that qualify for reduced rate. Most of the supplies you listed above including solar panel, wind/water turbines are specifically listed and eligible for reduced rate. Double glazing and energy-efficient domestic appliances do not qualify for the reduced rate. However, heating not reduced rate unless supplied under a “relevant scheme” to a “qualifying person” ie grant to old pple, pple on benefits etc under Group 3 which lists supply only included so far as grant-funded.

Its also important to note that UK’s Group 2 is not in line with EU, in particular, it is held to be outside of the permitted supplies within Annexe III of the Principal VAT Directive and the CJEU has raised an infringement by CJEU. According to EU, the reduced rate should only apply under a defined social policy and should not be “open to all”.

UK has proposed draft legislation “Value Added Tax (Reduced Rate) (Energy-saving Materials) Order 2019” which intends to reduce the scope the existing Group 2. No one knows whether these changes will be implemented after Brexit.