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VAT on energy-saving materials: zero rated until March 2027

The supply and installation of energy-saving materials in residential property is zero rated for VAT. It runs until 31 March 2027 and then goes back to the reduced rate of 5%. It applies across the United Kingdom, Northern Ireland included — that last part changed on 1 May 2023 and a lot of material online still says otherwise.

Source: HMRC VAT Notice 708/6, consulted 23 August 2026. Check it before you rely on it; reliefs move.

What is covered

• Air source, ground source and water source heat pumps
• Solar panels, both photovoltaic and thermal
• Batteries for storing electricity
• Wind and water turbines
• Insulation to walls, floors, roofs and pipework
• Heating controls — thermostats, thermostatic radiator valves
• Smart diverters

Since February 2024 it also covers buildings used for a relevant charitable purpose, not only homes.

The date is a trap in three places

On a £12,000 installation the difference between 0% and 5% is £600. That figure turns up in three places where nobody is looking for it.

• A quote with a long validity period that gets accepted after the date. Whose £600 is it?
• A calculator or configurator with the rate written into it, which will be quietly wrong from 1 April 2027 onwards.
• A staged job that starts before and completes after. The rate follows the tax point, so whatever is invoiced or paid before the change carries the old rate — invoice the completed stage before 1 April 2027.

The first one is easy to fix and worth fixing now: a line in your standard quote terms saying the price assumes the current VAT treatment and will be adjusted if it changes before the work is carried out. That sentence costs nothing today and settles an argument in 2027.

Zero rated is not the same as exempt

Zero rated work is still taxable work at a rate of nothing. You still record it, it still counts towards your turnover, and you can still reclaim the VAT on what you bought to do it. Exempt work behaves differently. If you find yourself with a lot of zero-rated output and normal-rate input, you may end up reclaiming more than you pay — which is a good problem and a reason to talk to your accountant about return frequency.

One job, two rates

A heat pump install that also involves remedial work to the existing system can carry both treatments on the same invoice. That is the practical argument for the VAT rate living on the line rather than on the document: one setting per invoice forces somebody to split the job into two, and then to remember why.

What this does not tell you

It does not tell you whether a particular product on a particular job qualifies, and the edges are genuinely narrow. The notice is the authority; your accountant is the one who should read it against your job. What is worth taking from here is the shape: zero now, five from April 2027, everywhere in the UK, and a sentence in your quote terms in the meantime.