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A zero-rate of VAT on the installation of energy-saving materials (ESMs), including solar panels, in residential accommodation, was introduced on 1 April 2022. At the time, it only applied to England, Scotland, and Wales.

Following a new agreement between the UK and the EU, the zero-rating was also implemented in Northern Ireland on 1 May 2023.

The relief is set to last until 31 March 2027. On 1 April 2027, the VAT rate on such supplies will return to 5% (the reduced rate).

Following a 2023 call for evidence, the Government has extended the eligibility for the relief to include other technologies, as well as extending the eligibility for buildings used for a relevant charitable purpose.

UK VAT law is consolidated in the Value Added Tax Act 1994. These changes were implemented through statutory instruments: The Value Added Tax (Installation of Energy-Saving Materials) Order 2022, The Value Added Tax (Installation of Energy-Saving Materials) Order 2023, and The Value Added Tax (Installation of Energy-Saving Materials) Order 2024 amended the 1994 Act.


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