The rules are simple – there’s no VAT on either the materials OR the installation of materials if supplied and installed together.
If you have materials supplied only, then you’ll need to pay 20% VAT.
In other words:
“The Zero rating for energy saving materials involves the supply/installation of energy saving goods. If solar panels are only supplied then the liability will be 20% but if they are supplied and installed then the liability would be zero rated for both the goods and the installation of the goods.”
Energy-saving materials and heating equipment (VAT Notice 708/6) Part 2.1
Zero-rated installations
From 1 April 2022 until 31 March 2027, the zero rate applies to the installation of certain specified energy-saving materials (read paragraph 2.12) in, or in the curtilage of, residential accommodation (read paragraph 2.23) in Great Britain.
From 1 May 2023 until 31 March 2027, the zero rate applies to the installation of certain specified energy-saving materials (read paragraph 2.12) in, or in the curtilage of, residential accommodation (read paragraph 2.23) in Northern Ireland.
2.11 Energy-saving materials covered by the reduced rate
Subject to one of the social policy conditions being satisfied or the 60% threshold not being exceeded, the following energy-saving materials when installed in residential accommodation in Great Britain between 1 October 2019 and 31 March 2022, and Northern Ireland between 1 October 2019 and 30 April 2023 were reduced-rated:
- controls for central heating and hot water systems (read paragraph 2.13)
- draught stripping (read paragraph 2.14)
- insulation (read paragraph 2.15)
- solar panels (read paragraph 2.16)
- ground source heat pumps (read paragraph 2.19)
- air source heat pumps (read paragraph 2.20)
- micro combined heat and power units (read paragraph 2.21)
- wood-fuelled boilers (read paragraph 2.22)
2.12 Energy-saving materials covered by the zero rate
The zero rate applies to the installation of the following energy-saving materials in residential accommodation in Great Britain between 1 April 2022 and 31 March 2027, and in Northern Ireland from 1 May 2023 and 31 March 2027:
- all energy-saving materials as listed in 2.11
- wind turbines (read paragraph 2.17)
- water turbines (read paragraph 2.18)
These energy-saving materials were included in the reduced rate prior to 1 October 2019 and will continue to be included in the reduced rate from 1 April 2027 onwards.
2.16 Solar panels
Solar panels include all systems that are installed in, or on the site of, a building and that are:
- solar collectors such as evacuated tube or flat plate systems, together with associated pipework and equipment, such as circulation systems, pump, storage cylinder, control panel and heat exchanger
- photovoltaic (PV) panels with cabling, control panel and AC/DC inverter
If you need more information on what is or isn’t included then please let us know.