You could be eligible to pay just 5% VAT on insulation to your property from Websters Insulation Ltd...
What does the 5% VAT rule apply to:
• Supplies made by installers of energy saving materials, including builders and any other businesses who install energy saving materials either as their main business or as identical to other activities – not applicable to DIY.
• Supply of services of: installing energy saving materials in all homes.
• Has to be provided and installed VAT registered person or business. Customers have to receive a single invoice covering the supply and fitting of goods.
• Materials provided on their own, without installation services remain standard rated.
• Installation means putting in place energy saving materials, that are permanently fixed in place.
• As installers may need to undertake minor building works as part of the ‘process of the fitting of energy saving materials' (painting, plastering etc. to make good after that work, then these too are eligible as long as they are supplied by the installer to the house holder.
• The reduced rate is for ‘already constructed' buildings (retrofitting). There are some zero rates for the construction, sale and ling-lease (or conversion) of new dwellings by developers.
• Energy saving materials etc. which are incorporated by a builder in a new dwelling are subject to VAT at the zero rate (more details – Notice ‘708 Buildings and Construction' or ‘Notice 719 VAT refunds for ‘do-it-yourself' builders and converters').
• The reduced rate applies to the supply of services of installing energy saving materials (and the supply of those materials by the person installing them) in all homes.
What buildings are included in the reduced rate?
• Owner occupied homes.
• Homes rented from private landlords.
• Homes rented from local authorities and housing associations.
• Residential caravans.
• Residential boats.
• Relevant buildings such as old people's homes, children's homes, nursing homes, and non-business charity buildings. (See sheets for more details on this section)
Energy savings materials used in the following are charged at the normal 17.5% rate:
• Hospitals (private or NHS).
• Prisons/penal institutions.
• Hotels, inns or similar establishments.
Areas of the place to be insulated that qualify:
• Walls, roofs, lofts (also the supply of vents in roof and loft spaces as part of the installation of insulation materials is eligible. The temporary fitting of walkways and ladders during the installation of roof insulation is eligible, unless they are retained for use after the installation.
Types of grant funded schemes that the reduced rates apply to:
• Installing energy savings materials in the homes of qualifying persons to the extent that the supply is grant funded.
• Where two people live in a dwelling, and one person is a qualifying pensioner or person, and the other residents are not, the reduced rate will apply if the supply is to the qualifying pensioner or person. That person will have to be responsible for ordering the work to be done.
Grant funded supplies to qualifying pensioners – who are they?
• Aged 60 and over and who receive a grant for the installation, maintenance and repair of central heating systems and home security goods.
How do you know whether supplies made under a grant scheme are eligible for the reduced rate?
• The reduced rate is available for all supplies made under a grant scheme, remembering that it's whole aim is to fund the installation of energy efficient measures in the home of the less well off. There will usually be no need to look at the formal basis of the grant scheme concerned. Usually the organisers of individual grants make it quite clear what they pay for.
What if a grant covers part of the cost of installation of energy saving materials etc and other work?
• Two possibilities:
• Grant awarding body specifies how much of the grant is awarded to fund the installation of energy saving materials etc., (or the other work). If that is the case, the part of the grant allocated to fund the installation of energy saving materials etc. is treated as a grant paid for that purpose.
• The grant awarding body does not specify how much of the grant relates to particular elements of the job. Here, the grant would have to be awarded proportionately, and so the proportion of installation of energy saving materials would be identified. It will usually be acceptable to identify the category of VAT exclusive Vis a Vis the category of work chargeable at the standard rate.
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