No changes to VAT relief on energy saving material


This year’s planned withdrawal of the 5% reduced rate of VAT relief for the installation of most energy saving materials (see VAT alert August 2015) has been cancelled.

Despite an EU ruling that the UK’s 5% rate was too generous and should not apply to residential buildings in general, it appears that the EU Commission has backed down and is now prepared to allow the UK’s position to prevail.

Therefore, the provision of products such as solar panels and other energy saving products, when installed into residential buildings, will continue to benefit from the reduced 5% VAT rate and this will not be increased to 20% as proposed – at least for now!