Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether the Government has assessed (a) the impact of the zero rate of VAT on the installation of energy-saving materials on the uptake of such materials and (b) the potential impact on households and businesses of the scheduled expiry of that zero rate in March 2027.

This Government is committed to improving the quality and sustainability of our housing stock, through improvements such as low carbon heating, insulation, solar panels, and batteries.

Installations of qualifying energy-saving materials (ESMs) in residential accommodation and buildings used solely for a charitable purpose benefit from a temporary VAT zero rate until March 2027, after which they will revert to the reduced rate of VAT at five per cent. This support – worth over £1 billion – will aid households and charities in improving the energy efficiency of their buildings, help to reduce carbon emissions, and ultimately help us to reach our ambitious Net Zero by 2050 target.

The temporary zero rate of VAT for ESMs took effect on 1 April 2022. The scope of the zero rate was extended on 1 February 2024. On both occasions, the Government published Tax Information and Impact Notes detailing the expected impacts of these policy changes. These documents can be found at the following links:

The Value Added Tax (Installation of Energy-Saving Materials) Order 2022 - GOV.UK

Extension of VAT energy-saving materials relief - GOV.UK