VAT on energy-saving products

[Enthalpy]

I am over 60 so qualify a reduced rate of VAT (5%) when certain energy-saving products are installed in your home.

Tax on shopping and services - https://www.gov.uk/tax-on-shopping/energy-saving-products

I am planning to get a new boiler and unvented cylinder installed. I am also planning energy saving upgrades:

• TRVs fitted to radiators
• Old controller (boiler on or off) replaced with new controls for Load Compensation (Thermostat, wiring centre and BUS cable installed between wiring centre and boiler).

If these are, for example, 1/4 of the total cost of the installation, will 1/4 of the bill be eligible for the reduced rate of VAT (5%) when certain energy-saving products are installed in your home?

 

[Timmy D]

I just read it and it’s easier for me to copy/paste the relevant section.

ExampleThe installer is charged £400 (excluding VAT) for insulation material and charges you £1,000 (excluding VAT) for the installation. As the value of the materials (the insulation) is only 40% of the total cost to you for both the materials and installation, the installer can charge the reduced VAT rate of 5% on the total cost as 5% of £1,000 is £50.

ExampleThe installer is charged £3,500 for solar panels and battery (excluding VAT) and charges you £5,385 (excluding VAT) for the installation. As the value of the materials (the solar panels and the battery) is 65% of the total cost to you for both the materials and installation, it is over the 60% threshold. This means the installer will need to charge VAT for the solar panel and battery at the standard rate and the installation will qualify for the reduced rate of 5%.

 

[snowhead]

According to the link, installation of the boiler amd cylinder would have to be through an Energy Grant Scheme to qualify for reduced VAT.

Energy products that do not qualify​

You pay the standard rate of VAT for:

• heating appliances or systems - unless you get an energy efficiency grant
• energy efficient boilers
• secondary or double glazing
• low emission glass
• energy efficient fridge freezers
• wind turbines
• water turbines

 

[Brambles]

Hi,

Vat is a complex topic in both terms of your age ( for qualification) and the 40 / 60 rule as described above.

When you get quotes for the work, you need to establish what Vat rate the proposed installer is going to apply. It is difficult to change the Vat rate once the invoice has been raised. If the Contractor applies the wrong Vat rate, either too high or too low they are at significant risk of being penalised by HMRC - they (HMRC) don’t recognise mistakes - and generally apply a penalty charge. However, they don’t reimburse the consumer.

If the job is small, try looking for a Contractor who has a low turnover below the threshold and is not Vat registered.

As the consumer, you cannot generally reclaim Vat back from HMRC that has been wrongly charged. The issue here is that a Vat invoice is only a Vat invoice if the Vat rate applied is correct. If the Vat rate applied is incorrect, it is not a valid Vat invoice, so you cannot reclaim the overpaid Vat.