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HMRC internal manual

VAT Energy-Saving Materials and Grant-Funded Heating Supplies

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HM Revenue & Customs
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Grant-funded installations: installation of heating appliances

The reduced rate applies to the supply and installation of certain heating appliances under grant- funded schemes. This is covered by the VAT Act 1994, Schedule 7A, Group 3, Items 1 and 2, and Legal Notes 4(a) to (g). The reduced rate applies to the installation, repair and maintenance of a boiler, radiators, pipework and controls forming a central heating system. This is covered by the VAT Act 1994, Schedule 7A, Group 3, Items 5 and 6.

Micro Combined Heat and Power (MCHP) systems

Legal Note 4A states that for the purpose of the VAT Act 1994, Schedule 7A, Group 3, Items 5 to 8, central heating system includes a system which generates electricity. This refers to Micro Combined Heat and Power (MCHP) systems which are heating systems that also generate electricity. The electricity generated can then be used by the householder or ‘sold’ by the householder to the National Grid.