As announced in the Spring Statement 2022, the government initiative which sees reduced VAT costs on “energy efficient” installations will be reduced further, from the current five percent, to zero. The cut will help make switching to these products more affordable and when teamed up with other incentives like the government’s Smart Export Guarantee and upcoming Boiler Upgrade Scheme could mean more savings overall. The government will also remove the social policy conditions from the previous iteration of this legislation, meaning that anyone should qualify for the zero percent VAT.
The temporary rate change will begin on 1st April, 2022 and continue for five years until 31st March, 2027 after which the rate will switch back to five percent if no further legislation is put in place in the meantime.
Energy-saving materials (ESMs) eligible for the VAT cut include:
● controls for central heating and hot water systems
● draught stripping
● solar panels
● ground source heat pumps
● air source heat pumps
● micro combined heat and power units
● wood-fuelled boilers
Wind and water turbines will also be added back onto the list for reduced VAT after they were removed in October 2019.
The news is good news for anyone looking to make the move to a greener, more energy-efficient home and a step in the right direction towards the government’s Net Zero goal.