VAT on energy-saving products

If you’re eligible, you’ll pay a reduced rate of VAT (5%) when certain energy-saving products are installed in your home.

Your supplier will charge you the reduced rate on the installation and any extra work that’s part of it.

Not all products or installations qualify for the reduced rate and you cannot buy or install them yourself.

Eligibility

To qualify for the reduced rate, you must be over 60 or getting one or more of the following:

  • Child Tax Credit (but not the family element)
  • Council Tax Benefit
  • Disability Living Allowance
  • Personal Independence Payment
  • a disablement pension
  • Housing Benefit
  • Jobseeker’s Allowance (income-based)
  • Income Support
  • War Disablement Pension
  • Working Tax Credit

You will also be eligible to get the reduced rate on the products if the total cost of them (not including VAT) is not over 60% of the cost of the installation of the products (not including VAT).

If your products cost more than 60% of the installation, you’ll only be entitled to the reduced rate on the installation.

Your supplier will be responsible for charging you the correct rate of VAT.

Example The installer is charged £400 (excluding VAT) for insulation material and charges you £1,000 (excluding VAT) for the installation. As the value of the materials (the insulation) is only 40% of the total cost to you for both the materials and installation, the installer can charge the reduced VAT rate of 5% on the total cost as 5% of £1,000 is £50.

Example The installer is charged £3,500 for solar panels and battery (excluding VAT) and charges you £5,385 (excluding VAT) for the installation. As the value of the materials (the solar panels and the battery) is 65% of the total cost to you for both the materials and installation, it is over the 60% threshold. This means the installer will need to charge VAT for the solar panel and battery at the standard rate and the installation will qualify for the reduced rate of 5%.

Energy products that qualify

You pay the reduced rate of 5% for:

  • controls for central heating and hot water systems
  • draught stripping, for example insulation fixed around windows and doors to reduce draughts
  • insulation on walls, floors, ceilings and lofts
  • solar panels
  • ground-source heat pumps
  • air-source heat pumps
  • micro combined heat and power units
  • wood-fuelled boilers

Central heating systems

You pay the reduced rate of 5% for work funded through energy efficiency grants on the:

The reduced rate is only for the grant-funded part of the work.

Energy products that do not qualify

You pay the standard rate of VAT for:

  • heating appliances or systems - unless you get an energy efficiency grant
  • energy efficient boilers
  • secondary or double glazing
  • low emission glass
  • energy efficient fridge freezers
  • wind turbines
  • water turbines