0% VAT on energy-saving materials: When does the relief end?

The temporary 0% VAT rate is due to end on 31 March 2027. From 1 April 2027, qualifying installations will generally be subject to the reduced rate of 5% VAT instead.

No. The relief is not being entirely removed. Instead, the current temporary 0% VAT rate will revert to the reduced 5% VAT rate from 1 April 2027.

While eligibility must be considered based on the specific facts of each installation, technologies that can qualify for VAT relief include:

• Solar panels
• Heat pumps
• Insulation
• Draught stripping
• Central heating and hot water controls
• Certain wind and water turbines

The rules are subject to various conditions, so advice should be sought where there is uncertainty.

In many cases, the relief applies to the supply and installation of qualifying energy-saving materials. However, the precise VAT treatment will depend on the nature of the works and the contractual arrangements. 

As announced at Budget 2026, “heat batteries” will be added to the list of qualifying energy-saving materials from 1 April 2027, where installed in qualifying residential accommodation or charity buildings.

The changes may be particularly relevant for:

• Housebuilders and residential developers
• Landlords
• Housing associations
• Property investors
• Homeowners planning energy-efficiency upgrades
• Charities undertaking building improvement projects

For larger projects, the VAT saving can be significant. Businesses and property owners considering qualifying installations should therefore review their plans before 1 April 2027 to determine whether the current 0% VAT rate can still be secured.