This page summarises HMRC’s Energy-saving materials and heating equipment (VAT Notice 708/6), last updated by HMRC on 31 January 2024. The notice is written for contractors, but it also helps homeowners check that a quote is charging the right VAT.
A gas boiler is not an energy-saving material. Supplying and fitting a new gas boiler, or a whole gas central heating system, is normally charged at the standard rate. The exception is when it is grant-funded for a qualifying person (see below).
The rates and dates
- 0% (zero rate): installing qualifying energy-saving materials in homes, from 1 April 2022 in Great Britain and from 1 May 2023 in Northern Ireland, until 31 March 2027.
- 5% (reduced rate): from 1 April 2027, the same installations go back to 5%. Grant-funded heating for qualifying people is also 5% (section 3 of the notice).
- Standard rate: everything else, including selling materials without fitting them.
The relief covers homes (“residential accommodation”). From 1 February 2024 it also covers buildings used only for a relevant charitable purpose, such as a village hall. Hotels, hospitals and prisons are standard-rated.
What counts as an energy-saving material
- Heating and hot water controls: manual or electronic timers, thermostats, and mechanical or electronic valves, including thermostatic radiator valves.
- Draught stripping around windows, doors and loft hatches.
- Insulation for walls, floors, ceilings, roofs and lofts, and for water tanks, pipes and fittings. Curtains and carpets do not count.
- Solar panels: solar thermal collectors (evacuated tube or flat plate) with their pipework, pump, cylinder, controls and heat exchanger, and solar PV with cabling, controls and inverter.
- Wind and water turbines, with the equipment they need to run.
- Ground source heat pumps. From 1 February 2024 this includes the groundworks needed to lay the ground loop.
- Air source heat pumps that are permanently fixed. Portable units do not count. HMRC says most fixed air conditioning units are air source heat pumps, although borderline products are judged case by case. Older guidance excluded air conditioning, so ignore any page that still says that.
- Water source heat pumps, including any dredging needed for the pipework (from 1 February 2024).
- Micro combined heat and power units, which make heat and hot water and also generate electricity.
- Wood-fuelled boilers designed to burn only wood (including chips and pellets), straw or similar plant material. An integral fuel hopper is included. Multi-fuel or dual-fuel boilers that can also burn coal or oil, stand-alone wood-burning stoves, and building a log or fuel store are all standard-rated.
- Batteries that store electricity, whether retrofitted to solar or turbines or standalone on the grid (from 1 February 2024).
- Smart diverters that send surplus solar or turbine electricity to appliances such as a heat pump or immersion (from 1 February 2024).
It has to be supplied and fitted
The relief covers installing the materials, and materials supplied by the person who installs them. If you buy a smart thermostat or TRVs from a shop, that sale is standard-rated, even if you or someone else fits them later. An installer who fits materials you bought yourself can zero-rate their labour.
Mixed jobs: boilers, radiators and heat pumps
When several things are done together, the VAT depends on whether it is one supply or several separate ones. HMRC’s own examples:
- New gas central heating (boiler, radiators, pipe, valves and controls): this is one standard-rated supply of a central heating system. The TRVs and controls do not get 0% just because they are part of it.
- The same system with an air, ground or water source heat pump instead of a boiler: this is one zero-rated supply, because the main element is zero-rated.
- TRVs added later as a separate job: if the customer asks for TRVs separately after other work has started, that installation can be zero-rated. If they were part of the original building contract, they follow that contract’s rate.
- Insulation built into a new extension: this is part of building the extension, so it is standard-rated.
Signs of a single supply include one price, a package deal, and everything fitted at the same time. Separate prices, separate invoices and work done at different times point to separate supplies.
Grant-funded heating at 5%
Section 3 of the notice gives a 5% rate for grant-funded heating work in the main home of a qualifying person. This means someone aged 60 or over, or someone receiving certain benefits listed in the notice, who orders the work and receives the grant. It covers:
- gas-fired and oil-fired boilers, radiators, electric storage heaters, gas room heaters with thermostatic controls, closed solid fuel fire cassettes, and electric dual immersion heaters with factory-insulated tanks
- installing, repairing and maintaining a central heating system, including micro CHP
- renewable heating systems, such as solar or heat pump heating
- reconnecting a qualifying person to the mains gas supply
Only the grant-funded part gets 5%. Anything the householder or a landlord pays on top is standard-rated, and the installer has to split the invoice fairly. If the work is also an energy-saving material, such as a heat pump, the 0% rate applies instead until 31 March 2027.
What stays at the standard rate
Other energy-efficient products are standard-rated. This includes efficient gas boilers (unless grant-funded as above), double or secondary glazing, low-emissivity glass and efficient appliances.
Related
General guidance only, not tax advice. This page is rewritten from the old hub.myboiler.com extract of Notice 708/6 and checked against the current HMRC notice (last updated 31 January 2024). HMRC section numbers have changed since the old page was written. VAT treatment depends on the contract and the facts of each job, so check the notice or ask HMRC for anything borderline.