NEW GOV SCHEME: Drive Your Business With 0% VAT on Energy-Saving Materials (ESMs) Installation

In a newly announced Government scheme, having energy-saving materials (ESMs) installed in UK homes will positively impact UK households, installers and the country’s net zero goals. This scheme effectively makes ESMs, including all heating controls, even more affordable for consumers, ensuring they see a faster return on their initial investment. Read on to find out more about the scheme and how it can benefit your business as an installer.


What has the Government announced?

While energy-saving upgrades like heating controls have been Proven to Save Energy and Money, the initial investment can put some homeowners off upgrading, especially during this cost-of-living crisis.

Recognising the role heating controls play in reducing energy costs at a time when Energy Price Hikes are affecting millions, the Government announced in its Spring Statement a scheme to remove VAT duty on the installation cost of energy-saving materials (ESMs) by VAT-registered installers, passing on savings to the homeowner that will enable more UK households across England, Wales and Scotland to start saving more energy and money for a lower set-up cost.

This scheme is effective from April 1st 2022 and due to run until 31st March 2027, and aims to:

  • ● Incentivise uptake of ESMs
  • ● Allow set-up cost savings to be passed on to the consumer
  • ● Reduce cost of living for UK households via energy savings
  • ● Boost demand for the installation of ESMs
  • ● Help the UK reach its net zero goals

Find out more about the details of the scheme on the website: The Value Added Tax (Installation of Energy-Saving Materials) Order 2022


What ESMs are included in the 0% VAT-rated scheme?

  • ● Heating controls
  • ● Solar panels
  • ● Heat pumps
  • ● Insulation

It’s important to note that 0% VAT can only be applied when heating controls are NOT purchased and installed as part of a new boiler installation, which is not eligible for the 0% VAT scheme. If heating controls are purchased and installed as part of a new boiler installation, standard VAT rate must apply.


A positive step for Installers and Homeowners alike

The scheme is expected to positively impact businesses in Britain that install ESMs in residential properties. For the duration of the scheme, there will be no requirement to charge VAT to customers for the purchase and installation of ESMs.

As an added benefit, there’s also no need to spend time considering the social policy conditions or calculating whether the installation qualifies for VAT relief, saving valuable time.

Businesses will still be able to recover input tax in relation to supplying the ESMs.

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