Changes to VAT zero rating imminent
HMRC has announced an extension to the materials qualifying for the VAT zero rate from 1 February 2024. What’s the full story?
The government often uses tax policy to encourage the use of energy efficient/otherwise environmentally friendly technologies. Currently, the purchase of certain energy-saving materials (ESM) is zero rated for VAT until 31 March 2027, at which point it is due to revert to the reduced VAT rate of 5%. Following a consultation, the list of materials qualifying for the zero rate has been extended to include the following from 1 February 2024:
- Electrical battery storage that is retrofitted to a qualifying ESM (currently this is only available if the battery is fitted at the same time as the ESM).
- Installation of electrical battery storage as a standalone technology connected to the grid.
- Water-source heat pumps; and
- Diverters retrofitted to ESMs such as solar panels and wind turbines.
The zero rate will also apply to the installation of some groundworks that are required for the installation of heat pumps. These works will be specifically defined in the legislation.
Further information on the outcome of the consultation can be found here.
Related Topics
-
Timetable for agent multi-factor authentication rollout published
HMRC has published further details of its plans to introduce multi-factor authentication (MFA) for tax agents. The rollout is intended to strengthen security across HMRC's online services and will be introduced in stages over the coming months. What do you need to know?
-
Using the EIS to unwind capital gains tax
You inherited shares from your father last year and sold them several months later making a tidy capital gain. You’ve read that the enterprise investment scheme (EIS) can defer the resulting tax bill, but how might it reduce it?
-
Electronic VAT return and payment due
This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.