VAT AND ENERGY EFFICIENCY, OR, 2MM MAKES ALL THE DIFFERENCE
Released On 26th Feb 2023
The supply and installation of certain energy saving materials in residential property can currently be zero-rated (after 31 March 2027 the rate reverts to 5%.)
You might think that if the Government introduces a VAT relief because it wants to improve domestic energy efficiency, any insulation works should qualify for relief.
But the default case with VAT is that you charge VAT at 20% unless all conditions for relief are met. This means that “borderline” cases are common, as in the case discussed below.
Among other things, the law permits relief for the supply and installation of insulation, in residential accommodation, for walls, floors, ceilings, roofs or lofts or for water tanks, pipes or other plumbing fittings.
Domestic conservatory roofs typically lack insulation, so if you get a contactor to simply stick insulating materials onto the existing polycarbonate sheets this is probably zero-rated. There’s an existing roof, and you get it insulated.
The law doesn’t refer to “the supply of an insulated roof” so if you get the whole roof replaced, this will be standard-rated even if the new roof is much better insulated.
Greenspace Limited’s offering is a hybrid. It disturbs as little as possible of the pre-existing roof structure- the frames and beams - in order to prevent leaks but the existing glass or polycarbonate panels between the beams are removed and replaced by new panels.
These panels are about 73 mm thick. The majority is polystyrene foam but this is covered with a thin aluminium layer and a protective powder coating which are together around 2mm thick. This outer layer is waterproof to keep the rain out.
The Court of Appeal has just upheld previous decisions that Greenspace’s product is standard-rated. The thin outer layer makes all the difference. The product is a weatherproofed replacement roof panel; not insulation for an existing roof.
If you are considering domestic energy efficiency work, you need to check the detail before assuming the work will be VAT-free.
