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HMRC internal manual

VAT Energy-Saving Materials and Grant-Funded Heating Supplies

Energy-saving materials: introduction

The scope of the reduced rate set out in the VAT Act 1994, Schedule 7A, Group 2, Items 1 and 2 is very tightly drawn, only being applicable to the supply and installation (as a single supply) of certain specified materials whose primary purpose is energy saving listed in the VAT Act 1994, Schedule 7A, Group 2, Legal Note 1(a) to 1(k) which are as follows.

Meaning of ‘energy-saving materials’

  1. For the purposes of this Group “energy-saving materials” means any of the following-

(a) insulation for walls, floors, ceilings, roofs or lofts or for water tanks, pipes or other plumbing fittings;

(b) draught stripping for windows and doors;

(c) central heating system controls (including thermostatic radiator valves);

(d) hot water system controls;

(e) solar panels;

(f) wind turbines;

(g) water turbines;

(h) ground source heat pumps;

(i) air source heat pumps;

(j) micro combined heat and power units;

(k) boilers designed to be fuelled solely by wood, straw or similar vegetal matter.

The reduced rate applies to the installation of energy-saving materials in existing dwellings. This is sometimes called retro-fitting.