In our pursuit for a greener, more sustainable future, it's clear that solar panels and other energy-saving materials have taken centre stage. The continuous surge in popularity is supported by several key aspects, from environmental benefits and economic advantages to energy independence and increased property value. However, one crucial aspect that requires our attention is the VAT treatment for these items in the UK.
The Implications of VAT on Solar Panels and Energy-Saving Materials
Starting from April 1st 2022, until March 31st 2027, the installation of solar panels and select energy-saving materials are subject to a temporary zero-rated VAT in Great Britain, which encompasses England, Scotland, and Wales. Keep in mind that this is exclusively for residential properties.
Zero-rated goods and services are taxable but at a rate of 0%. Post-March 31st 2027, the VAT will revert to a reduced rate of 5%.
However, if the installer procures energy-saving materials externally, these materials are standard-rated for VAT at 20%.
Meanwhile, Northern Ireland maintains a reduced percentage VAT rate of 5% for installing solar panels and specific energy-saving materials, with certain restrictions for residential installations.
List of Zero-Rated Energy-Saving Materials in Great Britain
From solar panels and ground source heat pumps to insulation materials and smart heating controls, several items are zero-rated for VAT in Great Britain until March 31st 2027. Let's break down this list:
- Solar Panels: A clean and renewable source of energy that can significantly lower your electricity bills.
- Wind and Water Turbines: These generate power by harnessing the natural forces of wind and water, providing an environmentally friendly alternative to traditional power sources.
- Ground Source Heat Pumps and Air Source Heat Pumps: Efficient devices that use the natural heat from the earth or air to warm your home.
- Insulation Materials: These include walls, floors, ceilings, roofs, pipes, loft insulation, cavity wall insulation, and draught stripping.
- Micro Combined Heat and Power Units: These units are designed to generate heat and electricity simultaneously from the same energy source in individual buildings or complexes.
- Wood-fuelled Boilers: An eco-friendly alternative to traditional boilers, they use wood pellets or chips as fuel.
- Central Heating and Hot Water System Controls: Such as time and temperature controls, TRVs (thermostatic radiator valves), and smart heating controls.
- Draught Stripping and Excluders: Simple yet effective solutions to prevent heat loss from your home, improving energy efficiency.