The Value Added Tax (Installation of Energy-Saving Materials) Order 2022 (S.I. 2022/361) inserted Group 23 into Part II of Schedule 8 of the Value Added Tax Act 1994, with effect from 1 April 20221. Schedule 8 is the zero-rating schedule, so Group 23 sets out which supplies of installed energy-saving materials fall within it1.
The group covers two kinds of supply: services of installing energy-saving materials, and energy-saving materials supplied by the person who installs them1. Both apply to residential accommodation or to a building intended for use solely for a relevant charitable purpose1. Residential accommodation is defined to include a building, or part of a building, that consists of a dwelling or a number of dwellings, a building used for a relevant residential purpose, a caravan used as a place of permanent habitation, and a houseboat1.
The materials listed in the group are set out below1.
| Energy-saving materials within Group 23 |
|---|
| Insulation for walls, floors, ceilings, roofs or lofts, or for water tanks, pipes or other plumbing fittings |
| Draught stripping for windows and doors |
| Central heating system controls, including thermostatic radiator valves |
| Hot water system controls |
| Solar panels |
| Wind turbines |
| Water turbines |
| Ground source heat pumps |
| Air source heat pumps |
| Micro combined heat and power units |
| Boilers designed to be fuelled solely by wood, straw or similar vegetal matter |
The group has been amended since it was inserted. The Value Added Tax (Installation of Energy-Saving Materials) Order 2023 (S.I. 2023/376) inserted words into the Group 23 heading with effect from 1 May 2023, and the Value Added Tax (Installation of Energy-Saving Materials) Order 2024 (S.I. 2024/24) inserted paragraph 1(1)(l) and (m) of the Notes with effect from 1 February 20241. Those later additions brought electrical storage batteries and smart diverters within the definition of energy-saving materials1. A water source heat pump was also added to the list1.
The heading of the group states the territorial and time limits: installation of energy-saving materials in England and Wales and Scotland from 1 April 2022 to 31 March 2027, and in Northern Ireland from 1 May 2023 to 31 March 20271. The Notes define relevant supplies accordingly, by reference to where the residential accommodation is and when the supply is made1.
Why it matters for households
Zero-rating means VAT is charged at a nil rate on the supplies that fall within Group 23, rather than at the standard rate. For a household, the practical effect is that the VAT treatment of an installation depends on whether the work and the materials match the definitions in the group, and on where in the UK the property is and when the supply is made1. The definitions are specific: an electrical storage battery qualifies only if it is intended for use solely for storing energy converted from electricity supplied to the accommodation in question or generated by a microgeneration system, and a smart diverter is defined as a device capable of automatically diverting electricity generated by a microgeneration system to one or more appliances in particular circumstances1. The group also treats groundworks, or dredging a body of water, carried out to install pipework or other equipment necessary for a ground source or water source heat pump as part of installing energy-saving materials1. Further detail on how the relief applies to installations is set out in the site's guide to VAT on home energy installations, and the list of qualifying measures is covered in which energy-saving materials qualify for VAT zero-rating.
What happens next
The group as it stands applies to supplies made before 1 April 2027 in England, Wales, Scotland and Northern Ireland1. The end date of the relief is set out in the site's guide to how long the VAT relief on energy-saving materials lasts. No further changes to Group 23 after 1 February 2024 are recorded in the text1.
Sources2 cited
- Value Added Tax Act 1994, legislation.gov.uk
- [](https://www.legislation.gov.uk/ukpga/1994/23/schedule/8/part/II/chapter/23/2024-02-01/data.xht), legislation.gov.uk