Tax on shopping and services
VAT on energy-saving products
You鈥檒l pay a rate of either 5% or 0% VAT when certain energy-saving products are installed in your home if you鈥檙e eligible.
Not all products or installations qualify for the lower rate and you cannot buy or install them yourself.
Your installer will be responsible for charging you the correct rate of VAT.
The rate you pay and your eligibility depends on whether you are in Great Britain (England, Scotland and Wales) or Northern Ireland.
If you鈥檙e in Great Britain
You鈥檒l pay a rate of 0% VAT on both:
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certain products supplied by your installer
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the cost of all work to install those products in your home
If you鈥檙e in Northern Ireland
To be eligible for the reduced rate you must be over 60 or getting at least one of the following:
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Child Tax Credit (but not the family element)
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Council Tax Benefit
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Disability Living Allowance
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Personal Independence Payment
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a disablement pension
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Housing Benefit
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Jobseeker鈥檚 Allowance (income-based)
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Income Support
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War Disablement Pension
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Working Tax Credit
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Armed Forces Independence Payment
What rate you鈥檒l pay
The rate you pay depends on how the installation costs are split.
The total cost of installation is made up of two parts:
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the cost of the products
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the cost of the labour
If the cost of the products (not including VAT) is 60% or less of the total cost of the installation (not including VAT), you鈥檒l pay 5% VAT on everything.
If the products cost more than 60% of the total cost of installation, you鈥檒l only pay 5% VAT on the labour. You鈥檒l pay the standard rate of 20% VAT for the products.
Example - insulation materials are 60% or less of the total cost of installation
Your installer charges you a total of 拢1000 (excluding VAT) for installation 鈥� 拢400 for the materials and 拢600 for the labour. This means the value of the materials (拢400) is only 40% of the total cost of installation (拢1000). Your installer can charge you the reduced rate of 5% VAT on the total installation cost.
Example - solar panels and battery materials are more than 60% of the total cost of installation
Your installer charges you a total of 拢5,385 (excluding VAT) for installation 鈥� 拢3,500 for the materials and 拢1,885 for the labour. This means the value of the materials (拢3,500) is 65% of the total cost of installation (拢5,385). Your installer can charge you standard 20% VAT on the materials part and 5% VAT on the labour part.
Energy products that qualify for a reduced rate
The products that qualify for a lower rate of VAT are:
- central heating and hot water controls
- draught stripping, for example insulation fixed around windows and doors
- to reduce draughts
- insulation on walls, floors, ceilings and lofts
- solar panels
- ground-source heat pumps
- air-source heat pumps
- micro combined heat and power units
- wood-fuelled boilers
- wind turbines (Great Britain only)
- water turbines (Great Britain only)
If heating equipment is funded through an energy efficiency grant
In Great Britain or Northern Ireland, you鈥檒l pay 5% VAT on heating equipment work funded through an energy efficiency grant if you鈥檙e eligible.
- installation of heating appliances
- installation, repair and maintenance of central heating systems
- installation, repair and maintenance of renewable source heating systems
Energy products that do not qualify
You pay 20% VAT for:
- heating equipment that is not funded through an energy efficiency grant
- energy efficient boilers
- secondary or double glazing
- low emission glass
- energy efficient fridge freezers
- wind turbines (Northern Ireland only)
- water turbines (Northern Ireland only)