Renewable Energy VAT Rates - UK

Below you will find details applicable for

  • Domestic Property Vat Rates
  • Businesses Property Vat Rates
  • Schools Vat Rates

Domestic Property Vat Rates

VAT rates on energy-savings materials: 

VAT rates on different goods and services 

  • 0%          Residential installations in GB
  • 5%          In Northern Ireland

 

Energy-saving materials and heating equipment (VAT Notice 708/6)

Energy-saving materials and heating equipment (VAT Notice 708/6)

  • From 1 April 2022 until 31 March 2027 a zero rate applies to the installation of energy-saving materials in, or in the curtilage, of residential accommodation in Great Britain

After 31 March 2027, the VAT rate changes back to reduced rate (5%)

 

  •  Energy-saving materials
    • controls for central heating and hot water systems (read paragraph 2.11)
    • draught stripping (read paragraph 2.12)
    • insulation (read paragraph 2.13)
    • solar panels (read paragraph 2.14)
    • ground source heat pumps (read paragraph 2.17)
    • air source heat pumps (read paragraph 2.18)
    • micro combined heat and power units (read paragraph 2.19)
    • wood-fuelled boilers (read paragraph 2.20)
    • wind turbines (read paragraph 2.15)
    • water turbines (read paragraph 2.16)

 

  • Residential accommodation
    • a building, or part of a building, that consists of a dwelling or a number of dwellings;
    • a building, or part of a building, used for a relevant residential purpose;
    • a caravan used as a place of permanent habitation; or
    • a houseboat

 Business Property Vat Rates – Super Tax Deduction

  • Businesses are not eligible for the 0% VAT on solar panels in the UK however, businesses are eligible for the 130% Tax Super-Deduction which allows businesses to claim back 130% of the amount they invest into solar panels on their taxes. 
  • The 130% super-deduction and 50% first-year allowance are generous brand new capital allowances for investments in plant and machinery assets. Both will allow investing companies to lower their corporation tax bills.

 

The 50% first-year allowance (FYA)

  • This lets taxpayers deduct 50% of the cost of other plant and machinery, known as special rate assets, from their profits during the year of purchase. This includes long life assets such as solar panels and thermal insulation on buildings.
  • The 50% FYA was introduced alongside the super-deduction and was due to end on 31 March 2023. We are extending it by three years to 31 March 2026. For each year following the first year, 6% of the remaining cost will be written off via Writing Down Allowances (WDAs).
  • 50% FYA allows for faster relief than under the default WDAs-only regime, which is worth 6% each year, including year one.
  • As part of his commitment to maintain a stable economy, the Chancellor’s long-term ambition is to make 50% FYA permanent.
  • What qualifies as plant and machinery
    • Solar panels
    • EV charge points

Schools

Schools are usually charged at 20% however, if the school is a Boarding School with a separate Residential Block, then this could be zero rated. There would need to be a distinct difference in the buildings though as you cannot allocate say 50/50 (apportionment is strictly not allowed).

The above are the Vat rates in the UK as at 26th June 2023.