Under the Northern Ireland Protocol, EU rules for VAT and excise apply to goods in Northern Ireland. Under the revised rules set out in the Windsor Framework, EU rules on VAT rates will not apply to a list of goods for consumption in Northern Ireland in certain circumstances. The UK Government has stated that the Framework means it can bring forward legislation to apply the zero-rate of VAT to energy saving materials in Northern Ireland, e.g., solar panels and heat pumps. In addition, a number of other flexibilities should enable UK-wide VAT changes to apply in Northern Ireland. In the area of excise, upcoming changes to alcohol duty would also apply in Northern Ireland.
A forward-looking mechanism in the area of VAT and excise will be established between the UK and EU to address future issues as and when they arise in order to manage any divergences in policy.
Source: EY
