0% VAT on Energy-Saving Materials

What to know first

This section summarises the points most likely to affect your project before you read the full guide.

Could the 0% VAT rate apply to my project?

The indicators below can help you spot the main questions, but they are not a VAT ruling. The supplier remains responsible for the rate shown on the invoice, and only a property-specific assessment can establish installation design, performance, permissions or suitability. Mixed-use buildings, charity use and bundled contracts may also need a closer review by the supplier, its accountant, a VAT adviser or HMRC.

Introduction

The 0% VAT relief for energy-saving materials is a temporary tax treatment for certain installed measures. It can cover work such as insulation, solar panels, heat pumps and heating controls, but only when the legal conditions are met. A product does not qualify simply because it saves energy or is marketed as green.

At the time of this review, qualifying supplies in England, Scotland and Wales can be zero-rated from 1 April 2022 to 31 March 2027. In Northern Ireland, the equivalent period began on 1 May 2023. Measures and charity buildings added by the 2024 changes are covered from 1 February 2024. Under current legislation, qualifying installations move to the reduced 5% rate from 1 April 2027 unless the law changes again.

What does 0% VAT mean in practice?

A zero-rated supply is still within the VAT system, but the supplier charges VAT at 0%. It is not the same as a VAT-exempt supply. A VAT-registered installer should still issue the appropriate invoice and show the 0% rate against the qualifying work.

The difference can be material. If a genuinely qualifying supply costs £8,000 before VAT, standard VAT at 20% would add £1,600, while a 0% rate adds no VAT. This is an illustration only. The relief does not control the supplier’s underlying price, and it does not guarantee that one quote will be cheaper than another.

How does the relief reach the customer?

A householder does not normally make a separate claim to HMRC for the temporary ESM relief. The supplier decides the liability of its own supply, applies the appropriate rate and accounts for it through its VAT return. That is why the clearest time to raise the issue is before accepting the quote, rather than after the work has been paid for.

A VAT-registered supplier should identify its VAT registration number and show the rate and amount of VAT on a valid VAT invoice. Qualifying lines can be shown at 0%, while unrelated or non-qualifying lines may be shown at 5% or 20%. If the business is not VAT-registered, it must not charge VAT. A price from an unregistered business therefore has no VAT added, but that is not the same thing as a VAT-registered installation being zero-rated under the ESM rules.

Zero-rating also differs from exemption from the supplier’s point of view. A zero-rated installation remains a taxable supply, so a VAT-registered business can normally recover VAT on relevant business costs under the ordinary input-tax rules. Those accounting rules do not set the installer’s labour rate, margin or final price. They simply determine the VAT treatment of the supply.

When comparing quotes, look at the same scope of work and compare the pre-VAT price, each VAT rate and the total payable. One quote may appear lower because it excludes scaffolding, electrical upgrades, making good or commissioning. Another may include those items but apply more than one VAT rate. A clear breakdown is more useful than a headline “VAT-free” claim.

Why is the relief focused on installation?

The policy is intended to reduce the tax cost of putting specified energy-saving measures into qualifying buildings. That explains why the law distinguishes an installed improvement from an ordinary retail sale. The measure must become part of a real project at the qualifying premises; buying equipment that might later be used somewhere else is not enough.

The relief can make an eligible project less expensive than the same net price charged at the standard rate, but it does not predict energy savings, payback or suitability. Those depend on the building, system design, energy use and quality of the work. VAT is one part of the decision, not a substitute for technical assessment or careful quote comparison.

Why the supply matters as much as the product

The relief is built around installation. A retailer that sells insulation, a battery or solar panels without installing them normally charges the standard rate. By contrast, an installation service can qualify, and the person who both supplies and installs the materials can usually include the materials in the qualifying supply when all the other conditions are met.

Other work can change the answer. Loft insulation and a new access hatch may form one qualifying installation, because the hatch exists only to enable the insulation. Insulation included in a larger extension contract may instead follow the standard-rated construction supply. The paperwork should reflect the commercial reality; separate lines or invoices do not by themselves create separate supplies.

This guide gives general information about the UK VAT relief. It is not a property survey, installation design or personalised tax opinion. Your supplier is responsible for accounting for VAT, and complex projects may need input from an accountant, a VAT adviser or HMRC.

Who is this guide for?

This guide is for homeowners, landlords, tenants who commission work, housing providers and charities that want to understand the VAT treatment of an energy-saving installation. It is also useful when comparing quotes or checking an invoice. You do not need to be receiving a benefit or grant to use the temporary ESM relief.

What this guide covers

The guide explains:

• When the temporary 0% period applies in each UK nation.

• Which people, homes, residential settings and charity buildings may be covered.

• The official categories of energy-saving materials.

• Common qualifying measures and common exclusions.

• Why installation, supply-only sales and DIY purchases are treated differently.

• How ancillary work, repairs, replacements and bundled projects are assessed.

• What to ask for in quotes, contracts and VAT invoices.

• How suppliers can correct an incorrect VAT charge.

• How grants and current household schemes interact with VAT.

When the 0% rate applies and where in the UK it applies

The temporary zero rate has a clear end date, but it did not start everywhere at the same time. Timing matters for older work, for projects that run across 31 March 2027 and for contracts with deposits or stage payments.

The current timetable

The 1 February 2024 change extended the relief to buildings intended solely for a relevant charitable purpose. It also added water source heat pumps, qualifying electrical storage batteries, smart diverters and necessary groundworks or dredging for ground and water source heat pumps.

The move to 5% from 1 April 2027 is already set out in current legislation. It is still sensible to check the position before signing a project close to the boundary because Parliament could amend the law, and the facts of a particular supply may place it outside the relief altogether.

Which date counts for a real project?

VAT uses “time of supply”, often called the tax point. The basic tax point for services is commonly linked to when the service is completed, but an invoice or payment can create an earlier tax point. Deposits and stage payments can therefore matter when a project crosses a rate change.

This does not mean a customer can simply choose whichever date produces the lower rate. The supplier must apply the VAT time-of-supply rules to the actual contract, invoices, payments and completion stages. Special rules can also apply around a rate change. Ask for the intended treatment before paying a large deposit, but do not treat a date on a quote as a guarantee.

Deposits, stages and changes to the work

A deposit can create a tax point for the amount paid, even though the installation will be completed later. The remaining balance may have a different tax point when a later invoice is issued or the work is completed. A staged project can therefore contain amounts treated as supplied on different dates. The supplier should apply the detailed rules rather than assuming that the rate on the first payment automatically governs the entire contract.

Stage invoices should correspond to genuine contractual stages or payments. Bringing forward an invoice or labelling an amount as a deposit does not necessarily secure a rate where the legal conditions are not met. HMRC has rules for changes in VAT rates, prepayments and credit notes. A supplier planning work around 31 March 2027 may need professional VAT advice, particularly where the sums are large or the contract is unusual.

Variations also need attention. A customer may add a battery, extra insulation, roof repairs or decorative work after the original quote. The addition might be part of the existing supply, a genuinely separate supply or a change that affects the character of the whole package. It may also have a later tax point. The variation document should describe the extra work and its VAT treatment instead of merely adding one unexplained figure to the final balance.

If work is cancelled or the price is reduced, the supplier may need to issue a credit note and adjust the VAT previously accounted for. Keep the original invoice, payment record, credit note and refund evidence together. Where a supplier becomes insolvent or refuses to correct its records, the practical recovery route can depend on how you paid and the contractual position; it is not solved by submitting an ordinary household VAT reclaim to HMRC.

A well-drafted contract should say whether prices include VAT, how a change in the statutory rate will be handled, when deposits become non-refundable and how stage payments relate to the work. That wording cannot override tax law, but it can make clear who bears a price change and reduce disputes if completion moves beyond the temporary 0% window.

Questions to ask if work crosses the deadline

• What is the expected completion date and what could delay it?

• Will there be a deposit, interim invoices or separate completion stages?

• Which event will the supplier use as the tax point for each supply?

• How will the contract deal with a VAT rate change before completion?

• Will the final invoice show the treatment of each payment clearly?

What about work before the current window?

Earlier work can fall under different rates and eligibility tests. Great Britain had a 5% regime before the temporary zero rate, and Northern Ireland moved to 0% later. If you are reviewing an old invoice, use the HMRC guidance that applied at the time rather than applying today’s rules retrospectively.

Who can benefit and which properties are covered

For the temporary ESM relief, the main questions are the building and the supply, not the customer’s age, income or benefit status. A homeowner, landlord, tenant, housing provider or other customer can benefit where a qualifying installation is supplied in qualifying premises.

Residential accommodation is wider than a normal home

HMRC uses a defined meaning of residential accommodation. Houses and flats are the clearest cases, but the list also covers several settings that are used as people’s homes. The exact facts still matter, particularly for communal, institutional or mixed-use buildings.

HMRC specifically says that hospitals, prisons and similar institutions, hotels, inns and similar establishments are standard-rated for this relief. A building can contain sleeping accommodation and still fall outside the residential definition.

Less obvious residential settings

The list also includes armed forces residential accommodation, children’s homes, hospices and certain care homes. Monasteries, nunneries and similar religious communities can be included, as can residential accommodation for pupils or students. These categories are based on the nature and use of the building. They are not a general rule that every institution with bedrooms is residential accommodation for VAT.

Some institutions qualify where they are the sole or main residence of at least 90% of the people who live there. The 90% condition belongs to that particular part of HMRC’s definition; it is not a test that an ordinary block of flats or householder must perform. An organisation relying on it should retain sensible evidence of the residents and the way the premises are used, especially if occupancy changes over time.

Permanent-habitation caravans and houseboats can also be covered in defined circumstances. This does not mean every touring caravan, holiday lodge, leisure boat or movable unit qualifies. The design, adaptation, location and permanent residential use can matter. For a houseboat, HMRC includes craft designed or adapted for permanent habitation with no means of self-propulsion, as well as certain other boats used as a person’s sole or main residence where the owner pays Council Tax or domestic rates.

Self-catering holiday accommodation is treated differently from hotels, inns and similar establishments in HMRC’s list. That distinction can feel counter-intuitive, so the supplier should identify the category it is relying on rather than applying a broad rule to all visitor accommodation. Serviced units, aparthotels, mixed holiday parks and buildings with shared commercial facilities may need a closer look at the actual facts.

The customer’s status does not normally change these building definitions. A landlord can commission qualifying work in a rented home, and a tenant can sometimes be the customer under the installation contract. What matters is the premises, the work and the supply. Consent from a freeholder, lender or landlord may still be required, but that is a property or contractual issue rather than a condition that creates the VAT relief.

Flats, communal areas and mixed-use buildings

Flats and blocks of flats are included. The difficult question is often what the equipment serves. Work wholly for the residential accommodation may be straightforward. A system serving flats, shops, offices and communal commercial space may need apportionment or a different analysis.

A shop with a flat above, a home used partly as business premises or a block with several uses cannot be decided by its postal address alone. The supplier should understand the area served, the contract and the building use. Clear drawings, specifications and a written description can help, but they do not replace the VAT test.

What does curtilage mean?

The relief can apply to installations “in, or in the curtilage of” qualifying accommodation. Curtilage usually means the land closely associated with the building, such as its garden, drive or yard. It is a fact-specific concept, not simply every piece of land under the same ownership.

This can matter for an outdoor heat-pump unit, a ground loop or another part of an installed system. Where equipment sits on separate or distant land, ask the supplier to confirm the basis on which it treats the installation as being within the qualifying premises.

Which charity buildings are covered?

From 1 February 2024, qualifying ESM installations can be zero-rated in a building intended for use solely for a relevant charitable purpose. That means use by a charity otherwise than in the course or furtherance of a business, or use as a village hall or similarly to provide social or recreational facilities for a local community.

The word “solely” matters. Business use, commercial letting or a mixed purpose can affect the result, but a fee or hire charge does not answer the VAT question on its own. The charity should describe the intended use accurately, and the supplier may need advice for borderline arrangements.

HMRC does not require a formal certificate for this particular relief. The installer should take reasonable steps and keep appropriate evidence, such as a letter from the charity confirming the intended use. The letter supports the decision; it does not make an otherwise non-qualifying building qualify.

What counts as energy-saving materials

“Energy-saving materials” is a legal list, not a general description. The measure must fit one of the specified categories and be installed under the conditions of the relief. A product can improve efficiency and still be standard-rated if it is not on the list.

The specified categories

What does installed mean?

Installation means putting the material in place. In most cases, the item is permanently fixed or integrated into the building or its systems. Loft insulation can qualify when it is unrolled and positioned, even though it is not fixed in the same way as a solar array or heating system.

Portable goods, spare equipment kept for future use and products that merely sit in a room are unlikely to meet that concept. The facts of the product and the work matter. A permanently fixed air-source heat pump can be an ESM; a portable cooling unit is not treated the same way.

Can associated equipment be included?

A qualifying system often needs more than the headline product. Solar photovoltaic panels need mounting, cabling, isolation and an inverter. Solar thermal systems need pipework, controls and heat-exchange equipment. Heat pumps may need controls, pipework, a cylinder, emitters and electrical work.

Associated items can be part of a single qualifying supply where they are integral or ancillary to the principal ESM installation. This does not mean every improvement carried out at the same time becomes zero-rated. A new roof, an extension, decorative work or general refurbishment can remain a separate or principal standard-rated supply.

Product labels do not decide the VAT rate

Retail descriptions such as “eco”, “low-carbon”, “smart” or “A-rated” are not legal VAT categories. Ask the supplier to identify the relevant ESM category and explain how the quoted work fits it. Manufacturer material can help describe a product, but it does not replace HMRC guidance or the legislation.

Common measures that usually qualify

The measures below are common examples of the specified categories. They still need to be installed in a qualifying building and supplied in a qualifying way. The examples describe the VAT category, not whether the technology is suitable for a particular property.

Heating and hot water controls

Manual or electronic timers, room thermostats, hot-water controls and mechanical or electronic valves can be ESMs. Thermostatic radiator valves are a familiar example. A stand-alone control installation can therefore qualify during the temporary period.

Context matters. If the controls are supplied as part of a conventional boiler central-heating package, HMRC’s example treats the package as one standard-rated central-heating system. The same controls requested later under a genuinely separate contract may be a separate qualifying supply.

Insulation and draught stripping

Qualifying insulation can cover walls, floors, ceilings, roofs, lofts, water tanks, pipes and other plumbing fittings. Common domestic work includes loft insulation, cavity-wall insulation, solid-wall insulation, floor insulation and insulation around hot-water systems.

Draught stripping is narrower. It covers fixed strips around windows, internal or external doors and loft hatches to reduce draughts. Replacing a whole window, fitting curtains or carrying out general joinery is not converted into a qualifying draught-stripping supply by describing it as energy efficient.

Solar panels, batteries and smart diverters

Solar photovoltaic panels generate electricity, while solar thermal collectors provide heat. HMRC includes the equipment essential to the installed system, such as appropriate cabling, controls, inverters, pumps, storage cylinders and heat exchangers, depending on the technology.

From 1 February 2024, electrical storage batteries can qualify when installed in residential accommodation or a qualifying charity building. This includes a battery fitted with new microgeneration, a battery retrofitted to an existing system and a stand-alone battery intended to store grid electricity, provided the statutory conditions and the wider supply rules are met.

Smart diverters were added on the same date. They automatically redirect electricity generated by qualifying microgeneration to appliances in the building. A diverter supplied with a new solar system will often be ancillary to that system; a later retrofit can also be a qualifying installation in its own right.

Air, ground and water source heat pumps

Air source and ground source heat pumps are specified ESMs. Water source heat pumps joined the list from 1 February 2024. A fixed air-to-air unit may fall within the air-source category, but a portable or moveable unit does not. HMRC says doubtful products depend on their facts.

A heat-pump project can include emitters, controls, cylinders, pipework and electrical work. HMRC gives an example of a central-heating system built around an air, ground or water source heat pump as one zero-rated supply because the principal elements are zero-rated. That example does not confirm design, efficiency, grant eligibility or property suitability; those need separate checks.

Necessary groundworks or dredging for ground and water source heat pumps were expressly included from 1 February 2024. The work must be carried out to install pipework or other equipment necessary for the heat pump. General landscaping, unrelated excavation or building a new structure is not automatically covered.

Wind, water, micro-CHP and wood-fuelled boilers

Small wind and water turbines, micro combined heat and power units and qualifying wood-fuelled boilers are also on the list. Essential operating equipment can form part of a wind or water turbine installation. Micro-CHP units produce heat and electricity together.

A qualifying wood-fuelled boiler is designed to use wood, straw or similar vegetal matter. A multi-fuel or dual-fuel boiler designed to burn coal or oil as well is standard-rated, as is a stand-alone wood-burning stove. A new building or extension used as a fuel store is also separate standard-rated work.

Check installation requirements separately

VAT relief does not certify an installer or prove that a design is safe. Solar, heat-pump, battery and electrical work may involve MCS requirements, electrical competence, planning, network, fire or building requirements. Those checks depend on the technology, scheme and property, and they sit alongside the VAT question.

Measures and situations that do not qualify

The ESM list has clear boundaries. Some familiar efficiency improvements are outside it, and a qualifying item can also lose the zero rate when it is supplied as part of a different principal supply.

Energy-efficient products outside the list

• Conventional energy-efficient gas or oil boilers under the ESM rules.

• Secondary glazing, double glazing and low-emissivity glass.

• Efficient fridges, freezers, washing machines and other appliances.

• Curtains, carpets and products not installed simply as insulation.

• Stand-alone wood-burning stoves and multi-fuel boilers.

• Portable or moveable air-conditioning or heating units.

Some of these items may have a different VAT treatment under another rule. For example, certain grant-funded heating installations can qualify for the reduced 5% rate under separate conditions. That does not make a conventional boiler an ESM or bring it within the temporary 0% ESM relief.

Buildings outside the ESM relief

HMRC identifies hospitals, prisons and similar institutions, hotels, inns and similar establishments as standard-rated for this relief. Ordinary commercial premises are also outside the residential route unless a different part of the building and supply can properly be treated separately.

For charities, the customer being a charity is not enough. The building must be intended solely for the relevant charitable purpose. Mixed or business use can prevent that route from applying.

When a qualifying item follows a wider job

Insulation in the walls and roof of a newly built extension is HMRC’s standard example. The customer is buying an extension, and the insulation is part of that construction. The whole supply is therefore standard-rated rather than split into a zero-rated insulation element.

The same risk can arise with a roof replacement that includes solar, a broad refurbishment that includes insulation or a conventional boiler package that includes qualifying controls. The answer depends on whether there is one supply or genuinely separate supplies, not on how attractive a separate line on the invoice looks.

The supply-and-installation rule and why it matters

The relief covers installation services and can also cover the materials supplied by the person who installs them. A retailer that only sells the goods normally charges 20% VAT. This difference explains why two projects using the same product can have different VAT bills.

Three common ways to buy the work

Supply-and-install is not a legal requirement for every part of the relief. HMRC expressly says that an installation service can qualify where the customer bought the materials from a retailer. The practical difference is that the retailer’s goods remain standard-rated, while the installer can zero-rate only the qualifying service it supplies.

Who is the supplier for VAT purposes?

The supplier is the person or business that contracts to make the supply and issues the invoice. An installer may use subcontractors, but the customer’s VAT invoice normally comes from the main contracting supplier. The contract should make clear who provides the goods, who carries out the work and who is responsible for defects.

Marketplaces and finance arrangements can make this less obvious. A platform may introduce the installer, take payment or sell equipment, while a different business carries out the work. Read the contract and invoice rather than assuming the brand on the website is the supplier of every element.

VAT registration changes the paperwork, not the test

A VAT-registered supplier must apply the correct VAT rate and issue the appropriate VAT invoice. You can check a UK VAT number using the GOV.UK service. A business that is not VAT-registered should not add VAT to its invoice, so it will not show a 0% VAT line.

No-VAT pricing is not the same as zero-rating, and neither label proves value. A non-registered business may bear VAT in its own costs and price accordingly. Compare the full scope, total price, payment terms, guarantees and competence rather than choosing on the VAT label alone.

What happens when several trades are involved?

A heat-pump, solar, battery or insulation project can involve builders, electricians, scaffolders and specialist installers. Each business must account for its own supply. The main contractor may make one qualifying supply to the customer while receiving differently rated supplies from subcontractors, or the customer may have separate contracts with each trade.

The result depends on the contractual chain and the work each party supplies. Ask who will invoice you and how the VAT treatment has been reached. Do not assume that every subcontractor invoice must carry the same rate as the final invoice to the householder.

DIY, materials-only purchases and online orders

Buying materials yourself can look cheaper before VAT, but a retail sale of ESMs without installation is standard-rated. The later installation does not usually turn the earlier retail purchase into a zero-rated sale.

What VAT should you expect on the goods?

An online or shop purchase of insulation, solar equipment, a battery or heating controls is normally charged at 20% VAT. This remains true even if the item would have formed part of a 0% supply had the installer supplied and installed it under one qualifying contract.

Keep the retailer invoice and the installation invoice separate in your records. The installer may be able to zero-rate its installation service, but it cannot normally rewrite the retailer’s sale or refund VAT that the retailer charged.

Can a household reclaim the retail VAT later?

There is no general consumer reclaim simply because qualifying materials are later installed. The ordinary self-build VAT refund scheme has its own narrow rules for qualifying new homes and certain conversions; it is not a general route for DIY retrofit materials.

If a retailer or platform has applied the wrong rate to its own supply, query that invoice with that supplier. Do not ask the installer to claim back VAT it did not charge and did not receive.

Online marketplaces, overseas sellers and imports

A website can involve more than one seller. Check the legal seller’s name, location, VAT number, delivery terms and who will install the equipment. Import VAT, customs charges, warranties and product compliance can apply where goods come from overseas. Those issues are separate from the UK installation relief.

A headline price may exclude electrical work, mounting, controls, commissioning, scaffolding or network requirements. Compare the whole installed project, not only the kit price. A property-specific assessment is needed for design and safety, and some grants or export arrangements require certified products and installers.

Safety and competence still come first

This guide does not give DIY installation instructions. Electrical, structural, roofing, battery, refrigerant and heating work can involve serious hazards and regulatory requirements. Use people with the appropriate competence and registrations for the work, and check the current scheme requirements where public funding is involved.

When buying separately may still make sense

Separate purchasing may offer more product choice or suit a customer who already owns compatible equipment. It can also create extra coordination, warranty and responsibility questions. The right comparison is the total installed cost and risk allocation, not an assumption that 0% VAT always makes supply-and-install the best option.

Ancillary works, repairs and replacements

Many installations need enabling work. The VAT question is whether that work is part of the qualifying supply, a separate supply in its own right or part of a larger standard-rated project.

What is ancillary work?

An ancillary element is not an aim in itself for the customer. It is a better means of receiving the principal supply. HMRC’s example is cutting a new loft hatch solely to gain access for loft insulation. The customer is buying insulation, and the hatch supports that installation, so the single supply can qualify.

Other examples may include necessary mounting, cabling, controls, pipework or making good that is integral to an installed ESM. Whether a particular item is ancillary depends on the facts. A customer may value a major roof repair, extension or landscaping project as a separate aim, even if it also helps an energy measure.

Special treatment for heat-pump groundworks

From 1 February 2024, the legislation expressly includes groundworks or dredging carried out to install pipework or other equipment necessary for a ground source or water source heat pump. This removes some doubt for the necessary preparatory work.

The wording is still limited. It does not automatically cover every excavation, drainage project, garden redesign or structure on the site. The quote should explain which work is necessary for the heat pump and which work has a separate purpose.

When extra work becomes a separate or principal supply

A new extension, a full roof replacement, structural alterations or a new outbuilding can be an aim in itself. If that work is the principal element of one package, a qualifying material within it may follow the standard rate. If there are genuinely independent jobs, each can have its own VAT treatment.

Separate pricing, timing and contracts can support the conclusion that there are multiple supplies, but they are not decisive. The supplier should reach a view based on what the customer is really buying and how the elements depend on each other.

Repairs, maintenance and replacement parts

Routine servicing or repair is not automatically an installation of an ESM. A visit to diagnose a fault, clean equipment or repair an existing system may be standard-rated. A genuine installation of a new qualifying ESM can still qualify, including a replacement that meets the category and other conditions.

A replacement component may instead be part of a repair service. The answer depends on the principal supply and the nature of the part. Separate grant-funded heating rules can apply to some repairs or maintenance, but those rules have different conditions and should not be confused with the temporary ESM zero rate.

How to scope the work clearly

• Describe the principal installation and the result being supplied.

• Identify enabling work that exists only for that installation.

• List unrelated repairs, decoration or construction separately.

• Record why groundworks or dredging are necessary for a heat pump.

• Ask the supplier to explain any different VAT rates in writing.

Clear scoping reduces misunderstandings, but it must be truthful. The aim is not to relabel standard-rated work as ancillary; it is to make the real relationship between the elements visible.

Mixed projects, bundled quotes and how VAT is calculated

A single measure with one installer may be simple. A package containing solar, roofing, insulation, heating and general building work can involve several VAT rates. The key distinction is between one composite supply and genuinely separate supplies.

Single supply or multiple supplies?

A single supply has one principal element, with other elements that are ancillary, or several elements that together form one overall thing for the customer. One VAT rate applies to the single supply. Multiple supplies exist where distinct elements have independent purposes and can sensibly stand alone.

Examples from HMRC guidance

• Loft insulation plus a hatch cut only for access can be one zero-rated supply.

• A conventional boiler, radiators, pipework and controls form one standard-rated system.

• The equivalent system centred on a qualifying heat pump can be one zero-rated supply.

• An extension with insulation in its walls and roof is one standard-rated construction supply.

• Thermostatic valves requested separately after extension work starts can be a separate supply.

These examples are useful because they focus on the customer’s objective. The same physical item can be zero-rated on its own and standard-rated inside another supply. A thermostat does not change its function, but its VAT treatment can change when it forms part of a conventional central-heating package.

Roofing and solar: a common grey area

Solar work and roof work can be distinct: one generates energy and the other repairs the building fabric. They can also form one integrated roofing project. The answer depends on the contract, the extent of the roof work, how the package is sold and whether the customer could realistically buy each job separately.

Ask the supplier for its VAT analysis before signing. A separate solar price can support multiple-supply treatment, but it does not override a contract that is in substance one roof-replacement package.

A worked apportionment example

Assume a customer buys two genuinely separate supplies from the same business: a qualifying solar installation for £7,500 and unrelated roof repairs for £3,000. During the temporary period, the solar supply can be 0% and the roof repairs can be 20%, adding £600 VAT to the repairs. The total would be £11,100.

That arithmetic is simple; deciding whether there are genuinely two supplies is the difficult part. If the real supply is one standard-rated roofing project, the supplier cannot create a zero-rated element merely by allocating a convenient figure to solar. Any apportionment must be fair, reasonable and based on real separate supplies.

Questions to ask about a bundle

• What is the principal result I am buying?

• Which elements can be bought and used independently?

• Are the prices based on real scopes and costs?

• Does the timing support separate jobs or one package?

• Why has the supplier applied each VAT rate?

• Will the contract and invoices use the same analysis?

What to ask for in quotes, contracts and invoices

Clear paperwork will not make a non-qualifying supply qualify, but it can prevent surprises and show how the supplier reached its VAT treatment. Ask questions before paying a deposit, especially where the project mixes energy measures with building work.

Questions to ask before accepting a quote

• Who is the contracting supplier and is it VAT-registered?

• Which specified ESM category does each measure fall within?

• Is the arrangement supply-and-install, installation-only or supply-only?

• Which building definition is the supplier relying on?

• Is any work being treated as ancillary, and why?

• Does the supplier see one supply or several?

• How will deposits and stage payments be treated for VAT?

• What happens to the price if the VAT rate changes before completion?

• Which installer, scheme and product requirements apply separately from VAT?

What the quote and contract should make clear

The documents should identify the property, the customer, the supplier and the work. They should describe the main installation, the essential equipment, enabling work and any unrelated construction. Prices and VAT rates should be clear enough for you to compare the same scope across suppliers.

The contract should also state who supplies the materials, who carries out the installation, payment stages, what is excluded, what happens if the scope changes and who is responsible for permissions or scheme evidence. Those terms affect much more than VAT; they also determine practical responsibility if something goes wrong.

Key details on a VAT invoice

The precise invoice requirements depend on the type and value of the invoice. A full VAT invoice normally includes a unique invoice number, dates, supplier name and address, VAT registration number, customer details, a description and quantity or extent of the supply, the net value, VAT rate and VAT amount.

For a zero-rated installation, the invoice should still identify the qualifying supply and show a 0% rate. If the project contains separate supplies at 0%, 5% and 20%, the breakdown should show which amount carries each rate. “VAT included” without the rate or calculation is not enough for a useful consumer check.

Checking the supplier and scheme claims

Use the GOV.UK VAT number checker for a UK VAT registration number. For technologies or grants that require MCS, check the MCS register rather than relying on a logo. For relevant publicly funded retrofit work, check current TrustMark and scheme requirements. Certification or registration does not guarantee the VAT treatment, workmanship, savings or dispute outcome.

Evidence for unusual buildings

A normal house or flat may need little beyond the address. A charity building, mixed-use property, communal system, houseboat or institutional residence may need more. Give the supplier accurate information and retain the explanation it used. HMRC says a formal certificate is not required for the ESM charity route, but reasonable checks and appropriate documentation are.

How to fix problems if you are charged the wrong VAT rate

An unexpected 20% charge is not automatically an error. First check the measure, building, supply structure and timing. If the rate still appears wrong, the normal route is to ask the supplier to correct its invoice and refund any overcharge.

Step 1: check the basis of the charge

• Is the measure on the current specified ESM list?

• Was it installed, rather than sold as goods only?

• Is the building within the residential or charity route?

• Is the work part of a larger standard-rated supply?

• Which tax point and VAT period has the supplier used?

• Is the supplier VAT-registered and is the VAT number valid?

Ask the supplier to identify the specific reason for its rate. A clear response may show that the work is standard-rated, or it may reveal a misunderstanding such as treating every materials-only purchase and installation as one supply.

Step 2: write to the supplier

Use the invoice number, date, property address and exact lines in dispute. Explain the ESM category and why you believe the building, installation and timing conditions are met. Ask for the supplier’s written analysis and, if it agrees there is an error, a corrected VAT invoice, any necessary credit note and a refund.

Keep the tone factual and give a reasonable date for a response. Attach copies rather than originals. Do not alter the invoice yourself or deduct an amount from a final payment without understanding the contract and getting appropriate consumer advice.

How a VAT correction is normally documented

HMRC’s correction rules are aimed at the VAT-registered business. A supplier that has overcharged VAT may need to issue a valid credit note or other correcting document, amend its VAT records and repay the customer. The corrected invoice should leave a clear audit trail.

The exact method depends on the supplier’s accounting position and whether the original VAT return has been submitted. That is for the supplier and its accountant to handle. Your practical focus is an accurate invoice and the return of any amount you were not liable to pay.

Can HMRC refund the customer directly?

There is no general direct HMRC refund route for a consumer who was overcharged by a trader. The supplier made the sale, charged the amount and accounted for VAT, so the correction normally runs through that supplier. HMRC can provide general VAT information, but it does not usually resolve the customer’s contractual refund dispute.

Where to get help if the supplier will not resolve it

• Citizens Advice consumer service for England, Scotland and Wales.

• Consumerline for a consumer dispute in Northern Ireland.

• The relevant installer scheme or consumer code, if the firm belongs to one.

• Your card provider, where chargeback or Section 75 may apply to the payment.

• Independent tax or legal advice for a high-value or complex dispute.

Citizens Advice or Consumerline can explain consumer routes and may pass information to Trading Standards. A scheme complaint can help only where the work and business fall within that scheme. MCS and TrustMark have defined remits; neither is a general VAT ombudsman.

A simple message to send

• Identify the invoice and disputed VAT amount.

• Describe what was installed and where.

• State the VAT rule you believe applies.

• Ask for the supplier’s written basis or a correction.

• Request the corrected documents and refund if agreed.

• Keep copies of every response and payment record.

Grants, subsidies and how they interact with VAT

The temporary 0% ESM relief is not limited to grant-funded work. A privately funded qualifying solar, insulation or heat-pump installation can be zero-rated, and a grant-supported installation can also be zero-rated. Grant eligibility and VAT liability are separate questions.

When the ESM zero rate takes priority

HMRC states that where a supply is both an installation of qualifying ESMs and potentially within the separate grant-funded heating rules, the temporary ESM zero rate applies during the current window. The grant changes who funds the work; it does not turn a qualifying ESM installation into a 5% supply.

This is why a qualifying heat-pump installation can usually remain 0% even where the Boiler Upgrade Scheme or another grant contributes. The property, measure, installation and timing conditions must still be met, and the grant scheme can impose additional product, installer or evidence rules.

The separate 5% grant-funded heating rules

HMRC has a separate reduced-rate route for specified heating appliances, central-heating systems and renewable source heating systems supplied under qualifying grant schemes to a qualifying person in their sole or main residence. These rules can cover some work that is not an ESM, such as a conventional boiler installation in the right grant circumstances.

The 5% rate under this route is generally limited to the extent that the supply is grant-funded. Customer contributions and unrelated building work can be standard-rated, with a fair and reasonable apportionment. The conditions are technical, so a supplier relying on this route should be able to explain the scheme, qualifying person and calculation.

Current schemes you may see in quotes

The Boiler Upgrade Scheme figures above are current at the review date and can change. A grant is a contribution rather than a promise to cover the full project. Eligibility, budget availability, installer participation, property requirements and technology rules must be checked through the official scheme process.

Scheme approval and VAT are separate evidence trails

A scheme decision and a VAT decision answer different questions. A Boiler Upgrade Scheme voucher, an ECO4 household route or approval from a local authority may show that the project meets that programme’s rules. It does not, by itself, prove that every item on the installer’s invoice is an ESM supplied at 0%. In the other direction, an installation can meet the VAT rules without the household qualifying for any grant.

Funding schemes can ask for evidence that VAT law does not require, such as an EPC, proof of income, tenure documents, details of the existing heating system, a property assessment or use of particular certification and consumer-protection frameworks. VAT records focus on the supplier, the measure, the premises, the nature of the supply and its timing. Keep both sets of documents; one should not be used as a substitute for the other.

The organisation making the funding decision may not be the business that invoices you. Under the Boiler Upgrade Scheme, the installer normally applies for the voucher. Under ECO4, an obligated energy supplier is responsible for delivery against its target, often through a delivery chain. A local authority can commission work through contractors. Check the legal name of the supplier in your contract and the party responsible for correcting the VAT invoice.

Do not start work, buy equipment or pay a non-refundable deposit on the assumption that funding will be approved. Some programmes require approval, a voucher or prescribed evidence before installation. Others depend on local availability or a supplier’s remaining delivery plans. A marketing eligibility check or referral can be useful, but it is not the same as a formal offer from the authorised scheme decision-maker.

How grants can appear on the invoice

A scheme may pay the installer, reduce the customer balance, issue a voucher or reimburse a customer. The presentation can differ, but the VAT calculation should still be internally consistent. Ask whether the payment is part of the consideration for the supply and how it has been reflected in the net price and VAT lines.

Where the ESM zero rate applies, the qualifying supply is 0% whether the customer pays all of it or a scheme contributes. Where the supplier relies on the separate grant-funded 5% rules, the grant-funded and customer-funded portions may need different treatment. The invoice should show enough detail to follow the calculation.

How to read a funded quote

Start with the full scope and price before the funding contribution. The quote should then make it possible to identify the grant, voucher or third-party payment, the balance due from you and the VAT rate applied to each relevant supply. A single unexplained “grant discount” can hide whether non-qualifying extras, customer contributions or later variations have been treated correctly.

A project that costs the household nothing can still be a taxable supply between the installer and the party funding the work. “Free to the customer” does not mean VAT-exempt, and it does not remove the need for accurate records. You may receive a customer statement rather than the same invoice sent to the funder, but you should still be able to understand what was installed, who supplied it and which guarantees or complaints arrangements apply.

For a partially funded project, check that the customer contribution has not simply been assigned a different VAT rate without an explanation. Under the temporary ESM rules, an otherwise qualifying installation remains 0% even when the customer pays part of it. Different treatment is more likely where there are non-ESM works, separate supplies or reliance on the distinct 5% grant-funded heating provisions.

Keep the final contract, itemised invoice, grant or voucher notice, completion certificate, product records and evidence of payment. These documents serve different purposes. Together they can help if the scheme audits the work, the supplier needs to correct VAT, a warranty claim arises or you later sell the property and need to explain the installation.

What to check before relying on funding

• The nation and property type covered by the scheme.

• The current application or delivery window.

• Who applies: the household, installer, supplier or local authority.

• Eligible measures, products, installers and evidence.

• Whether the offer is a grant, loan, discount or supplier obligation.

• What costs remain payable and what VAT rates apply to them.

Conclusion

The 0% VAT relief can remove VAT from a qualifying installation, but it does not apply to every energy-efficient product or every part of a home-improvement project. The answer turns on four practical questions: what is installed, where it is installed, what the customer is really buying and when the supply takes place.

The points worth checking every time

• Confirm that the measure is on the current ESM list.

• Check that the building is within the residential or charity route.

• Identify the supplier and whether the deal includes installation.

• Separate genuine independent work from ancillary or principal work.

• Check the tax point where a project crosses 31 March 2027.

• Ask for a clear quote, contract and VAT invoice.

• Treat grant eligibility and VAT treatment as separate decisions.

• Use the supplier correction route if the invoice appears wrong.

A clear scope and accurate paperwork make the discussion easier, but they cannot override the law. If the property, charity use or bundle is unusual, ask the supplier to obtain appropriate tax advice before you rely on the quoted rate.

What happens next

Start by writing down the measure, property use, supplier arrangement, other building work and expected dates. Check HMRC VAT Notice 708/6 and the current official scheme page for any funding you are considering. Use the GOV.UK VAT number checker, and check MCS or TrustMark only where those schemes are relevant to the technology or funding.

For a VAT error, go back to the supplier first. Citizens Advice can support consumers in England, Scotland and Wales, while Consumerline covers Northern Ireland. Rules, grant amounts, deadlines and guidance can change, so recheck them before paying a deposit or relying on a rate near the 2027 boundary.

This guide does not determine your project’s VAT treatment, funding eligibility or technical suitability. Clearwise may make an introduction only with your consent. Any installer or provider remains independent and decides whether it can assist. An introduction does not guarantee acceptance, a survey, funding, availability, VAT relief or an installation outcome.

You can use the FAQs for direct answers, the glossary for unfamiliar terms, the useful organisations for official and free routes, and the references to check the underlying rules before deciding what to do next.

Frequently Asked Questions

Understanding 0% VAT

Timing and UK nations

What usually qualifies

What does not qualify

Supply and installation rules

DIY and materials-only purchases

Bundled projects and mixed works

Property types and tricky cases

Charities and community buildings

Grants, subsidies and funding

Invoices, evidence and fixing mistakes

Useful organisations

HM Revenue & Customs (HMRC)

HMRC administers VAT and publishes VAT Notice 708/6. Its VAT general enquiries service can explain the general rules, but it does not usually settle a consumer refund dispute with an installer.

• 0300 200 3700
• www.gov.uk

Citizens Advice consumer service

Free, impartial consumer guidance for England, Scotland and Wales. It can explain complaint options and pass relevant information to Trading Standards, but it does not make the complaint or take legal action for you.

• 0808 223 1133
• www.citizensadvice.org.uk

Consumerline

The consumer advice helpline for Northern Ireland. It can give practical guidance about a dispute with a trader and may forward suitable complaints to the Trading Standards Service.

• 0300 123 6262
• www.nidirect.gov.uk

TrustMark

A government-endorsed quality scheme for home-improvement work. It is relevant to some funded retrofit programmes and has its own support and complaints processes for work within its framework.

• 0333 555 1234
• www.trustmark.org.uk

Microgeneration Certification Scheme (MCS)

MCS maintains certification requirements and records for certain small-scale renewable and low-carbon installations. Use its official services to check certification where a technology or grant requires it.

• 0333 103 8130
• mcscertified.com

References

Still have questions?

It’s completely normal to feel unsure about VAT on energy‑saving upgrades. The rules are technical, and the stakes can be high: a VAT mistake on a large installation can mean hundreds or thousands of pounds. If you’re in any kind of grey area, getting a quick sense‑check from someone who deals with these rules regularly can save you money and stress.