Zero VAT on Insulation – 1st of April 2022 - Who is eligible?

We are getting a lot of enquiries from people who want to understand the Spring Budget headline statement of no VAT on energy saving things like  insulation from the 1st of April 2022. 

We have tracked down the detail at this  Government web page.

To cut a long story short, the news is very disappointing if you are looking to install the insulation (or other ESM – Energy Saving Material) yourself. This is not a zero VAT scheme for DIY’ers. 

The announcement in the Spring Budget 2022 is a change to this existing scheme. Which applies only to certain Energy Saving Materials that are installed in residential accommodation by a contractor (in England, Wales and Scotland). 

The two big changes are that:

• Previously a household had to meet eligibility criteria (i.e., be on certain benefits etc) or go through a complicated “60% test” to get the VAT relief on the Energy Saving Materials used in the installation. With the changes in the Spring budget, from April 1st “the relief will no longer be restricted by the social policy conditions or the 60% test“ (although at the time of writing we are waiting for this Tax Notice page to be updated to absolutely confirm those points). The businesses that install the Energy Saving Materials will therefore not have to work out who is eligible and who is not – reducing their administrative burden.
• And of course, the VAT for the people that have the (eligible) work installed by someone else is now zero (previously it was at a reduced rate of 5% VAT for that scheme). 

Bottom line, the Spring Budget changes to VAT on insulation are perfect if you have a big job on and are getting someone else to do the work for you. But bad news if you are doing it yourself. 

As a retailer (that only supplies and does not install insulation and other ESMs) there is nothing we can do about the VAT (other than contact our MP – which we have already done). The VAT relief is claimed back by businesses contracted to install the insulation.The company that installs the insulation for you should pass on these savings and you should see zero VAT against the line(s) for the insulation on your Bill of Materials.

If you think the VAT relief on Energy Saving Materials (ESMs) should be extended to people installing the products for themselves, or indeed that the whole thing would be a lot easier if ESMs like  insulation are zero VAT, please do contact your local MP.

The scheme will run from the 1st of April 2022 to the 31st of March 2027.

What we are able to do... Did you know?

On Celtic Sustainables, order over £500 (inc VAT & excluding delivery) of either Cosywool Rolls or SupaSoft Rolls receive 5% off the Rolls on your order.