VENSAV2020 - History of the reduced rate: Extension of relief in 2000

Installation of energy-saving materials in all homes

As domestic consumers paid 5% VAT on domestic fuel and power, there was therefore a disincentive to improve energy efficiency if VAT on energy-saving products remained at the then standard rate of 17.5%. Consequently, with effect from 1 April 2000, the scope of the reduced rate was extended to the supply and installation in all residential accommodation or charity buildings - whether grant-funded or not - of the following energy-saving materials:

  • insulation for walls, floors, ceilings, roofs, lofts, water tanks, pipes and other plumbing fittings
  • draught stripping for windows and doors
  • central heating system controls
  • hot water system controls, and
  • solar panels.

The rates shown below together with the dates from which those rates took effect applied to the installation of certain energy-saving materials in the UK are shown below (together with the cessation date of the temporary zero-rated relief.) Note that references to GB and NI are to Great Britain and Northern Ireland.

Materials Dates
wind and water turbines: reduced rated\nreduced rating withdrawn (so standard rated between 1 October 2019 and 31 March 2022)\ntemporary zero rating introduced in GB from 1 April 2022 to 31 March 2027 (after which they revert to the 5% reduced rate) but continues to be standard rated in NI 28 July 2000\n1 October 2019\n1 April 2022
ground source heat pumps: reduced rated\ntemporary zero rating introduced in GB from 1 April 2022 to 31 March 2027 (reduced rating continues in NI) 1 June 2004\n1 April 2022
air source heat pumps: reduced rated\ntemporary zero rating introduced in GB from 1 April 2022 to 31 March 2027 (reduced rating continues in NI) 7 April 2005\n1 April 2022
micro combined heat and power units: reduced rated\ntemporary zero rating introduced in GB from 1 April 2022 to 31 March 2027 (reduced rating continues in NI) 7 April 2005\n1 April 2022
wood-fuelled boilers: reduced rated\ntemporary zero rating introduced in GB from 1 April 2022 to 31 March 2027 (reduced rating continues in NI) 1 January 2006\n1 April 2022