How long does the 0% VAT relief on energy-saving materials last?

The relief covers the installation of qualifying materials in residential accommodation and in buildings used solely for a relevant charitable purpose, and it applies across the United Kingdom⁴. Great Britain has had the zero rate since 1 April 2022; Northern Ireland has had it since 1 May 2023, when the Windsor Framework allowed the change to be extended there¹.

For a household, the deadline is the practical point. Works completed and paid for before 31 March 2027 fall under the zero rate; works paid for afterwards fall under the reduced rate. The government has said it will not extend the zero rate beyond that date at this stage⁶.

The relief in brief: a temporary 0% VAT rate

The relief is currently set to a temporary zero rate of VAT which applies until 31 March 2027¹. HMRC's own guidance repeats the same end point in several places: energy-saving materials installed in residential accommodation and certain charitable buildings are subject to VAT relief at 0% until 31 March 2027³. The Value Added Tax (Installation of Energy-Saving Materials) Order 2022 set the relief in force for the period from 1 April 2022 until 31 March 2027¹⁰.

The zero rate is not a permanent feature of the VAT system. The government's consultation outcome describes the reforms as permanent in structure, but says that when the zero rate aspect of this relief sunsets on 31 March 2027, the reduced rate applies⁶. That distinction matters: the relief itself continues, but at 5% rather than 0%.

The temporary zero rate was expanded with effect from 1 February 2024 to include additional materials⁸. The legislation states that this rate applies from 1 February 2024 to 31 March 2027¹¹. The expansion added electrical batteries that store electricity generated by certain energy-saving materials and from the National Grid, water source heat pumps and diverters, and certain preparatory groundworks for ground and water source heat pumps¹.

For a household, the practical effect is that the VAT position on a qualifying installation depends on when the supply is made and paid for. HMRC guidance notes that where the final payment was made on or after 1 April 2022, the supply would have been zero rated¹². The same logic runs to the other end of the period: a final payment made on or after 1 April 2027 falls outside the zero rate.

What counts as an energy-saving material

The qualifying list is set out in official guidance and covers 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 diverters³. These materials are subject to VAT relief at 0% until 31 March 2027³.

Batteries and smart diverters qualify only in a defined context. A single supply of a qualifying energy-saving material that includes smart diverters is currently subject to the temporary zero rate up to 31 March 2027 and will be reduced rated thereafter¹³. Electrical batteries installed as part of the installation of a qualifying energy-saving material are on the same footing, currently subject to the temporary zero rate up to 31 March 2027 and reduced rated afterwards¹⁴. The 2024 Order added water source heat pumps, certain electrical batteries and certain smart diverters to the list of energy-saving materials that can qualify for the reduced rate of VAT¹⁵.

The list has been stable for a long time. Other than wind and water turbines, the list of qualifying materials has remained the same since 2006¹⁶. The 2023 consultation proposed updating the list of materials that qualify for relief, which is what the 2024 expansion did¹⁷.

A single supply can include standard-rated elements. HMRC guidance states that the standard rated elements may be ancillary to, or an integral part of, the installation of energy-saving materials⁷. Where that test is met, the whole supply can fall within the relief rather than being split.

Great Britain and Northern Ireland: where the relief applies and since when

The relief applies from 1 April 2022 until 31 March 2027 in Great Britain and from 1 May 2023 to 31 March 2027 in Northern Ireland⁷. The Windsor Framework enabled these changes to be extended to Northern Ireland with effect from 1 May 2023¹. Before that, the relief had been available only in Britain¹⁸.

The earlier history explains why the start dates differ. 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 2023¹⁹. During that period the reduced rate of 5% applied, subject to the 60% test for supplies made in Great Britain between 1 October 2019 and 31 March 2022, and for supplies made in Northern Ireland from 1 October 2019¹⁹.

The 2023 statutory instrument extended the temporary zero rate to Northern Ireland, aligning treatment with Great Britain where the zero rate was introduced on 1 April 2022 and applies until 31 March 2027⁵. The Order also widens the scope of the zero rate from 1 May 2023 to 31 March 2027 and the reduced rate from 1 April 2027²⁰.

The relief applies in residential accommodation and certain charity buildings in the United Kingdom⁴. The 2024 changes, which are permissible under the Windsor Framework, take effect from 1 February 2024¹. The temporary zero rate for energy-saving materials closes on 31 March 2027 in Northern Ireland as well⁵.

Does the relief cover installation costs as well as the materials?

The relief applies to the installation of qualifying energy-saving materials, not to materials bought on their own. HMRC guidance describes the installation of qualifying energy-saving materials in buildings used solely for a relevant charitable purpose as included in the relief². The same structure applies to residential accommodation.

A restriction applies to some customers. For all other customers who live in residential accommodation, the relief is retained except where the cost of the goods element of the supply is greater than the labour cost of installing those goods²¹. Where that condition is breached, the relief does not apply to that supply.

Where a supply includes both qualifying and standard-rated elements, the treatment depends on how they relate. The standard rated elements may be ancillary to, or an integral part of, the installation of energy-saving materials⁷. That test allows a single supply to be treated as a whole rather than split into parts.

The timing rule is the one households most often miss. Where the final payment was made on or after 1 April 2022, the supply would have been zero rated¹². A final payment made on or after 1 April 2027 falls outside the zero rate and into the reduced rate.

Do charitable buildings qualify?

Installations of energy-saving materials qualified for relief when installed in both residential accommodation and buildings intended for use solely for a relevant charitable purpose until 31 July 2013⁹. The relief for charitable buildings was then reinstated: from 1 February 2024, installations of energy-saving materials qualify for the relief when installed in both residential accommodation and charitable buildings⁹.

The 2024 statutory instrument reinstates the relief for the installation of qualifying energy-saving materials in buildings used solely for relevant charitable purposes, such as village halls or similar recreational facilities for the community¹. The reduced rate that applies from 1 April 2027 extends to the installation of energy-saving materials into buildings used solely for a charitable purpose¹⁵.

For a village hall committee or a community building, the position is therefore the same as for a household: zero rated until 31 March 2027, reduced rated afterwards. The reinstatement date of 1 February 2024 means the relief applies to qualifying charitable installations made from that date⁹.

Why the zero rate was introduced and whether it might be extended

The relief sits inside a wider policy aim. The consultation that preceded the expansion framed it around meeting the legally binding commitment to reach net zero greenhouse gas emissions by 2050⁶. The 2024 Order widened the scope of the temporary zero rate and the reduced rate for the supply of installation of energy-saving materials¹⁵.

On extension, the government's position is stated plainly. Ten respondents suggested the sunset date should be extended or made perennial, and the government said it would not be fiscally prudent to take the decision to extend this zero rate beyond 31 March 2027 at this stage⁶. That is the current official position, not a statutory bar: a future Budget could change it.

Others have argued for a longer period. 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 2030²². That is a recommendation from an industry body, not a government commitment.

The reduced rate that follows is itself a form of relief. The legislation states that the zero rate will be replaced with the reduced rate after 31 March 2027 across the whole of the United Kingdom unless the law changes⁵. HMRC guidance confirms that qualifying installations revert to the reduced rate of VAT at 5%⁴.

What the deadline means for a household

The zero rate is a temporary window, and the date that closes it is 31 March 2027². Independent guidance aimed at householders states that 0% VAT applies to installing energy-saving materials, including insulation and solar panels, until 31 March 2027²³. The National Insulation Association recorded the same period when the zero rate began: from 1 April 2022 until 31 March 2027²⁴.

For energy independence, the relief lowers the upfront cost of the measures that reduce reliance on a supplier: insulation, solar panels, heat pumps and battery storage. It does not remove that reliance. A grid connection remains, a supplier remains, and the equipment itself comes from a manufacturer whose warranty and continued trading are separate questions from the VAT rate.

The deadline also interacts with grant funding. The Boiler Upgrade Scheme and the Energy Company Obligation operate on their own rules and dates, and the VAT treatment of a grant-funded installation is a separate question from eligibility for the grant. Pages on VAT relief on energy-saving materials and which energy-saving materials qualify for VAT zero-rating set out the qualifying list and the grant-funded heating rules in more detail.

Where a household is planning work that straddles the deadline, the final payment date is the trigger. A final payment made on or after 1 April 2027 falls outside the zero rate¹². The reduced rate of 5% then applies to the installation⁴.