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What qualifies for the lower rates of VAT?

Your building contractor will know what work attracts the reduced rate and will charge you at the correct rate, currently 5 per cent. You will not get the lower rate if you do the work yourself. If the materials and equipment go into a new house at the time of construction, you don’t pay any VAT at all.

Installation of any of the following qualifies for the lower rate of VAT:

• controls for central heating and hot water systems
• draught insulation - for example, around windows and doors
• insulation on walls, floors, ceilings, lofts, etc
• solar panels
• wind turbines
• water turbines
• ground-source heat pumps
• air-source heat pumps
• micro combined heat and power units
• wood-fuelled boilers
  

You can only get these lower rates if the energy saving materials are actually installed, and the work is done on your home.

You'll be charged the lower rate on the installation work itself as well as the materials.

You'll also get the lower rate on any necessary extra work that needs to be done as part of the installation - this doesn't apply if you're having them installed as part of a larger project such as building a new roof or an extension - or installing a central heating system.

The reduced rate of VAT can also apply to grant-funded repairs and replacements of this kind of equipment, even if the original system was not grant-funded.

• Read more about VAT and energy-saving materials Opens new window

What doesn't qualify for the lower rate of VAT?

You can't get the lower rate of VAT on the following:

• energy efficient boilers
• secondary or double glazing
• low emission glass
• energy efficient fridge freezers
• energy saving materials and equipment that you have bought but not had installed
  

However, if you get a grant towards the cost of installing any of these items, you might get the lower rate of VAT on the cost of the installation.

Grants for energy saving equipment

If you get a grant towards the installation of qualifying energy saving equipment, and it's being installed in your main or only home, you'll pay a lower rate of VAT. The lower rate applies where the objective of the grant scheme is to fund the installation of energy efficient measures in the homes of those on a low income. Information published about the scheme might make it clear if this is the case.

If you're 60 or older, you'll get the lower rate on the installation, maintenance or repair of a central heating system, and a renewable source heating system.

If you get one of the following benefits, you'll get the lower rate on the installation of heating appliances such as specific types of immersion heaters, boilers, storage heaters, gas heaters and radiators:

• Child Tax Credit - other than the family element
• Council Tax Benefit
• Disability Living Allowance
• disablement pension
• Housing Benefit
• income-based Jobseeker's Allowance
• Income Support
• War Disablement Pension
• Working Tax Credit
  

More useful links

• Benefits and financial support