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HMRC Policy paper: The Value Added Tax (Installation of Energy-Saving Materials) Order 2022

Who is likely to be affected

Businesses that provide and install energy-saving materials (ESMs) and customers who have the ESMs installed in England and Wales and Scotland.

General description of the measure

This measure introduces a time-limited zero-rate of VAT for the installation of certain types of energy saving materials (ESMs) and reverses Court of Justice of the European Union derived legislative changes introduced in 2019, which narrowed the scope of the previous relief, for installations in residential accommodation in Great Britain. The zero-rate will be available for a period of 5 years and will then revert to the 5% reduced rate of VAT. The measure permanently removes the social policy conditions and the 60% test which businesses were required to consider determining the VAT liability of ESM installations prior to these changes and brings wind and water turbines back into scope of the relief.

Source gov.uk

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