From 1 April 2022, a temporary zero-rate VAT will be introduced for the installation of Energy Saving Materials (ESM) in residential accommodation in Great Britain. The measure will be available for 5 years and will then revert to the 5% reduced rate of VAT.
In addition, it was introduced a permanent reversal of the 2019 changes, required as a result of the infraction proceedings with the European Commission, to include wind and water turbines to the list of ESMs and to remove certain conditions:
- The social policy conditions (supplies to persons aged 60 or over or in receipt of certain benefits, housing associations or installations in accommodation used solely for a relevant residential purpose); and
- The 60% test (where the cost of the ESM does not exceed 60% of the total value of the supply).
The initiative was introduced to incentivise the take-up of ESMs in line with the government’s net-zero objectives and to help businesses and households with the rising energy costs.
Matteo Zaccagni
