Which energy-saving materials qualify for VAT zero-rating?

The relief is not automatic and it is not open to every purchase. It attaches to the installation, not to the goods: energy-saving materials supplied without installation are standard-rated². It applies to supplies of services of installing energy-saving materials in residential accommodation where the supply is made to a qualifying person, a relevant housing association, or where the accommodation is a building or part of a building used solely for a relevant residential purpose³. Where the value of the materials exceeds 60% of the total value of the supply, only the labour element qualifies for the reduced rate and the materials are standard rated⁴.

The zero rate is temporary. It runs from 1 April 2022 until 31 March 2027 in Great Britain and from 1 May 2023 to 31 March 2027 in Northern Ireland, after which the reduced rate applies⁵. For a household weighing up a heat pump, solar array or battery, the timing of the installation therefore matters as much as the specification.

What qualifies: the energy-saving materials covered by the zero rate

The list of technologies that benefit from the relief is set out in legislation and has been widened over time. It included insulation, central heating system controls, hot water system controls, solar panels, wind turbines, water turbines, ground source heat pumps, air source heat pumps, micro combined heat and power units and wood-fuelled boilers⁷. The current guidance lists air source heat pumps, wood-fuelled boilers, central heating and hot water controls, draught stripping, ground source heat pumps, insulation, micro combined heat and power units, solar panels, water and wind turbines, water source heat pumps, electrical storage batteries and smart diverters as subject to VAT relief at 0% until 31 March 2027⁸.

Insulation is defined by function rather than by product name: it means materials that are designed and installed because of their insulating qualities⁹. The guidance gives the qualifying locations as insulation on walls, floors, ceilings and lofts¹. Damp proofing products do not qualify as energy-saving materials⁹.

Two exclusions matter in practice. The reduced rate does not apply if the energy-saving materials are installed exclusively to serve an indoor or outdoor swimming pool¹⁰. And a set of energy products sits outside the relief altogether: heating equipment that is not funded through an energy efficiency grant, energy efficient boilers, secondary or double glazing, low emission glass, energy efficient fridge freezers, and, in Northern Ireland only, wind turbines and water turbines, all carry 20% VAT¹.

The relief in brief: 0% VAT on installation in residential accommodation

The reduced rate applies to the supply and installation of energy-saving materials in residential accommodation¹⁰. The zero rate is the current form of that relief, and it covers both the products supplied by the installer and the cost of all work to install those products in the home¹. A household does not pay 0% on the panels and 20% on the labour, or the reverse: the whole qualifying supply is zero-rated.

The relief is also retained for buildings used solely for a relevant residential purpose, and for supplies to a relevant housing association as defined in legislation⁴. The installation of qualifying energy-saving materials in buildings used solely for a relevant charitable purpose is covered on the same basis¹².

The 60% test is the condition most likely to change what a household pays. Where the value of the energy-saving materials does not exceed 60% of the total value of the supply of installing them, the relief applies in full³. Where it exceeds that share, only the labour cost element qualifies for the reduced rate, with the supply of the materials standard rated⁴. A large battery alongside a modest amount of labour can push a quote over the threshold, and the invoice then splits into a zero-rated or reduced-rated labour element and a standard-rated materials element.

Great Britain and Northern Ireland: where the relief applies and how it differs

The relief now operates across the United Kingdom, but the two jurisdictions reached the zero rate by different routes and on different dates. In Great Britain, England, Scotland and Wales, installations of energy-saving materials are zero-rated during the period 1 April 2022 to 31 March 2027⁵. The Value Added Tax (Installation of Energy-Saving Materials) Order 2022 introduced a temporary relief from VAT in the form of a zero rate applied to the supply of installation of energy-saving materials in England and Wales and Scotland¹³.

In Northern Ireland the position is newer. Under the Windsor Framework, the VAT relief for energy-saving materials, previously available only in Britain, has been extended to Northern Ireland¹⁴. The Windsor Framework enabled these changes to be extended to Northern Ireland with effect from 1 May 2023⁷. Installations of energy-saving materials in Northern Ireland are zero-rated during the period 1 May 2023 to 31 March 2027⁵. The practical effect is that installations of energy-saving materials, including solar panels and heat pumps, now benefit from a zero rate in Northern Ireland¹⁴.

Before the zero rate, the reduced rate of 5% applied to Great Britain supplies made between 1 October 2019 and 31 March 2022, and to supplies made in Northern Ireland from 1 October 2019, subject to the 60% test for Great Britain supplies in that window¹⁵. The installation of energy-saving materials in residential accommodation was reduced rated in Great Britain between 1 October 2019 and 31 March 2022, and in Northern Ireland from 1 October 2019 and 30 April 2023¹⁶. The relief as it now stands applies from 1 April 2022 until 31 March 2027 in Great Britain and from 1 May 2023 to 31 March 2027 in Northern Ireland⁵.

For a household in Northern Ireland, the zero rate window is therefore shorter than in Great Britain, and the reduced rate returns on 1 April 2027¹⁷. The territorial extent of the relief is the United Kingdom, covering residential accommodation and certain charity buildings⁶.

Professional installation only: why DIY work does not qualify

The relief is a relief on installation. Not all products or installations qualify for the lower rate, and you cannot buy or install them yourself¹. Energy-saving materials supplied without installation are standard-rated². That single rule explains most of the questions householders raise about buying panels, batteries or insulation directly and fitting them.

The guidance works through the point with examples. For loft insulation, there is a single supply of the installation of energy-saving materials which qualifies for the reduced rate¹⁵. For solar panels, there is a single supply of the installation of energy-saving materials which qualifies for relief either at the reduced rate or at the zero rate¹⁵. In both cases the qualifying supply is the installation, not the materials on their own.

The same logic runs through the wider grant landscape. The Boiler Upgrade Scheme's grant offer letter requires, for a low carbon heating system, the relevant MCS certificate together with the manufacturer's instructions; for a biomass fuelled system, information about the Biomass Suppliers List; for certain energy efficiency measures, an appropriate claim of conformity and handover pack per PAS certification standards; a copy of the installer guarantee; and a dated copy or image of the installer invoice¹⁸. The invoice is the document that shows the rate applied.

Electrical work around a home energy installation is not a householder task. Guidance on wiring an outbuilding states plainly that it is absolutely not a DIY job¹⁹. Where a grant scheme requires an approved installer, the same pattern holds: the Electric Vehicle Homecharge Scheme requires the wall charging unit to be installed by a supplier approved by the Office for Zero Emission Vehicles, who claims the grant on the householder's behalf²⁰.

How long the zero rate lasts and what happens when it ends

The zero rate is temporary and its end date is fixed. These changes qualify for the temporary zero rate until 31 March 2027¹². The term "zero rated" refers to the temporary zero rate applying until 31 March 2027, after which the reduced rate applies¹¹. The relief is currently set to a temporary zero rate of VAT which applies until 31 March 2027⁷.

After that date the reduced rate returns. A reduced rate of 5% VAT applies to the installation of certain energy-saving materials in residential accommodation⁶. The reduced rate will remain fully available, except on wind and water turbines, for supplies of services of installing energy-saving materials in residential accommodation where the supply is made to a qualifying person, a relevant housing association, or where the accommodation is a building or part of a building used solely for a relevant residential purpose³. The difference between the two periods is 5 percentage points on the qualifying supply.

There is pressure to extend the zero rate. Energy UK has recommended extending zero-rated VAT on energy saving materials beyond the current end date of April 2027, to at least the end of 2030²¹. That is a recommendation, not a change in the law, and the end date in the legislation stands at 31 March 2027¹².

The government has consulted on the scope of the relief, including by updating the list of materials that qualify for relief²². Any widening of the list would take effect through legislation, and the current list and end date are the ones a household can rely on when a quote is prepared.

Why the relief matters for household energy independence

A zero rate on installation changes the economics of the measures that reduce a household's reliance on bought energy. Insulation cuts the heat a home needs to buy; solar panels and a battery cut the electricity drawn from the grid; a heat pump changes the fuel a home depends on. The VAT treatment applies across that set of measures rather than to one technology, which means the relief supports the fabric of the home and the generating equipment on the same terms⁸.

What the relief does not do is remove dependence. A grid connection remains, and a supplier remains, for any household that imports electricity or gas at any point in the year. A battery installed under the relief stores energy but does not make the home independent of the network, and the 60% materials test means a large battery relative to labour can reduce the share of the invoice that is zero-rated⁴. The relief also depends on a contractor being engaged, so the household's saving is tied to the installer's supply, not to its own labour¹.

The relief sits alongside the grant schemes rather than replacing them. The Boiler Upgrade Scheme funds heat pump and biomass installations through a grant paid to the installer, and the VAT treatment of the same installation is a separate question governed by the rules above¹⁸. Households comparing routes can read the Boiler Upgrade Scheme and ECO4 pages for the funding side, and the VAT relief on energy-saving materials page for the tax side.

The end date is the practical point. An installation completed before 31 March 2027 falls under the zero rate; one completed after it falls under the reduced rate, with the 5 percentage point difference applying to the qualifying supply¹². For a household planning work, the date on the invoice is what determines which rate applies.