Zero Rated Vat On Insulation Installation

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Zero Rated Vat On Insulation Installation

In a bid to reduce cost on Energy Saving Materials (ESM), the UK Government recently advised that they would cut the vat on insulation installation to zero rated vat. This new measure will be enforced from the 1st Of April 2022.

What does that mean?

You will still need to pay the 20% vat on the goods, the VAT reduction will be seem on the actual cost of installation. This mean you when you receive you bill for the labour part of the project there will be no VAT on the labour for the insulation. Therefore the directly affect individuals though lower prices charged by ESM installers. The installed will receive the benefit of the VAT reduction which should then be passed onto their customers.

How long will the zero rate vat on insulation installation be for?

The government has advised that this new measure will be in place for the next 5 years, after with there will be a reduced vat of 5% in place.

Under with policy does the zero rate vat on insulation installation fall?

You can find more information form the government by searching for value added tax on installation of energy saving materials commonly abbreviated to ESM.

When does the zero rate vat on insulation installation come into place?

This new policy will come into effect on Friday the 1st Of April 2022.

What other products are classed as energy saving materials?

  • Insulation
  • Wind and water turbines will be added back to the list of ESMs

To find out more information and current information please be sure to check the government website for up to date information.

Policies may change and this post may not be updated.

Click here to go directly to the government website:-

https://www.gov.uk/government/publications/changes-to-the-vat-treatment-of-the-installation-of-energy-saving-materials-in-in-great-britain/the-value-added-tax-installation-of-energy-saving-materials-order-2022

There is a section at the bottom of the page with an email address for you to contact should you have any further questions.

 

 

2 thoughts on “Zero Rated Vat On Insulation Installation

  1. Tim Small says:

    You say “You will still need to pay the 20% vat on the goods, the VAT reduction will be seem on the actual cost of installation.” I don’t think that’s correct. The whole job will be 0% rated – the company supplying the materials can reclaim the 20% VAT charged to them by their supplier, and then charge the end-user for both the goods and installation without VAT. The full details are now in “Energy-saving materials and heating equipment (VAT Notice 708/6) “.

  2. Sam Wardill says:

    My house has no cavity. I am removing a chimney in order to insulate the walls internally (with 50mm Celotex PL4000). Can I treat this whole job (including removing the chimney) as zero rate for VAT ?

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