Changes to VAT zero rating imminent
HMRC has announced an extension to the materials qualifying for the VAT zero rate from 1 February 2024. What’s the full story?
The government often uses tax policy to encourage the use of energy efficient/otherwise environmentally friendly technologies. Currently, the purchase of certain energy-saving materials (ESM) is zero rated for VAT until 31 March 2027, at which point it is due to revert to the reduced VAT rate of 5%. Following a consultation, the list of materials qualifying for the zero rate has been extended to include the following from 1 February 2024:
- Electrical battery storage that is retrofitted to a qualifying ESM (currently this is only available if the battery is fitted at the same time as the ESM).
- Installation of electrical battery storage as a standalone technology connected to the grid.
- Water-source heat pumps; and
- Diverters retrofitted to ESMs such as solar panels and wind turbines.
The zero rate will also apply to the installation of some groundworks that are required for the installation of heat pumps. These works will be specifically defined in the legislation.
Further information on the outcome of the consultation can be found here.
Related Topics
-
Could HMRC recategorise your subcontractors?
You use subcontractors for all your building projects and almost always the same individuals. You’ve heard that this could increase the risk of HMRC recategorising them as employees. What steps can you take to counter this?
-
Tribunal rejects reliance on adviser as reasonable excuse
A recent First-tier Tribunal decision has confirmed that relying on an accountant does not automatically amount to a reasonable excuse for missing a self-assessment deadline. The case highlights the limits of delegating tax responsibilities. What does this mean in practice?
-
HMRC issues new wave of offshore “nudge” letters
HMRC has issued a further round of “nudge” letters targeting individuals it believes may have undeclared offshore income or gains. The letters form part of HMRC’s ongoing use of data from international information exchange agreements. What should you do if you receive one?