5% VAT supplies of insulation for roofs

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

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    Should supplies of roofs with insulation qualify for a reduced rate of 5%? I hear it’s not as straightforward as it may sound. I’m particularly concerned with the roof replacement – the client has replaced a roof with an insulated roof.

    What about supplies of other energy-saving materials like insulation on floors, walls or roofs, double glazing, and other domestic supplies. The client also intends to install Solar panel, wind/water turbines as well as normal gas heaters, etc.

    Some of the work is done by the client and others by a professional.

    The client also runs a Charity and intend to fully take advantage of the rules and ensure 5% rate is applied to the supplies.


    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.


    Also worth to look at this case to answer your main question: HMRC v Wetheralds Construction – The reduced rate for energy-saving materials

    This case concerned the classification for VAT purposes of a product offered by Wetheralds which is designed for conservatory insulation. The FTT agreed with Wetheralds on its assertion that the supply being made was a single supply of the installation of energy saving materials and therefore attracted the reduced rate of 5%. HMRC disputed this decision, claiming that the installation amounted to more than energy saving materials and should be regarded as a supply of a new roof as new tiles were put down, meaning the supply was standard rated as more than merely insulating material was supplied. The case was referred to the Upper Tribunal (UT).

    The UT concluded that the FTT had failed to consider, in enough detail, the extent to which the supply was a roof rather than an addition of energy saving materials to the pre-existing roof UT found that the supply of a roof system did not fall within the reduced rate provisions of VATA 1994 Sch 7A Group 2 and concluded that a replacement roof is not an energy saving material, it is a roof and thus the supply should have been standard rated.

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