Zero rating on the installation of specified energy saving materials – The practical side!
(This article does not cover Grant-funded installations of heating equipment)
The Scope
| Zero rated | Standard rated | |
| Installation of energy saving by a business employed by the customer that the customer purchased directly from the retailer | Yes | No |
| Installation of energy saving materials by a business employed by the customer that supplies and installs the materials | Yes | No |
| Supply of energy savings materials without installation eg. Sale by a retailer | No | Yes |
Installation means permanently fixed in place however loft insulation can be positioned in place to qualify.
Installation with other works
Single supplies
When other goods and services are to be provided at the same time as the installation of energy-saving materials, it must be determined whether they form a single supply (subject to just one VAT rate) or multiple supplies (potential to be subject to different rates of VAT).
A single supply is when one part of the transaction is the main focus, and everything else is secondary. The other elements enhance the main part but aren’t goals on their own. Examples of a single supply would be:
- a single price
- the parts are not available separately
- the installation of all the parts are carried out altogether – the customer does not see the supply as separate
- Advertised as a package
Multiple supplies
Where a supply has distinct and independent parts, this is considered a mixed/multiple supply. Examples are:
- Pricing: Individual pricing or invoicing
- Time gap: some parts of the supply happen at different times which is substantial enough in length
- Independent elements: The supply components are not reliant on each other or connected
- Separate availability: Each item can be obtained individually
It is wise to consider whether the job that you are carrying out constitutes a multiple supply so that the VAT liability is correct!
By way of an example, a contract to build an extension to a house which also requires thermostatic valves to be fitted to all of the radiators, is a single standard-rated supply of construction services.
Compare this to a contract to build an extension but several months after the work has either commenced or been completed, the customer separately asks you to install thermostatic valves. The supply would be treated as a multiple supply and therefore the installation of thermostatic valves would qualify for zero rating.
A note on new build dwellings…
When constructing a new dwelling, the installation of energy-saving materials is zero-rated. This covers both the buildings construction and the installation of the energy-saving materials themselves.
