UK: VAT treatment Changes to the installation of Energy Saving Materials

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On 31 March 2022, Great Britain publicized the VAT treatment changes related to the installation of Energy Saving Materials (ESMs) permanently reversing the law introduced by the Court of Justice of the European Union in 2019. Through this measure, the list of the qualifying ESMs will widen incorporating additional technologies and removing complex eligibility conditions. 

The following are the changes brought upon by the Value Added Tax (Installation of ESMs) Order 2022: 


  • The basis for eligibility for relief will no longer be restricted. The social policy requirements as well as the 60 percent test have been permanently removed. 
  • The widening of scope for the qualifying ESMs. Wind and turbine will be added back to the qualifying list of ESMs. These were previously considered ineligible for relief in 2019. 
  • The temporary zero-rate relief for the installation of ESMs effective for five (5) years. Unless the government would issue an extension of the zero-rate relief, this will only be effective from 1 April 2022 until 30 March 2027. After 5 years, the rate for installation will revert to a 5% reduced tax rate. 


Source: The Value Added Tax (Installation of Energy-Saving Materials) Order 2022 – GOV.UK 

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