Changes to the vat treatment of solar panels and other energy saving materials are not as extensive as first feared.
Vat rate on solar panels.
In such cases where the cost of the physical solar panels total more than 60 of the total installation value the 5 rate applies only to the labour cost of installing the goods with the remainder charged at the standard vat rate of 20.
The government has introduced secondary legislation to amend the scope of the 5 rate to comply with european vat rules si 2019 958.
15 jul 2019.
The 5 rate on esms includes the installation of solar panels.
The 5 rate applies to the installation of these items as hmrc s guidance makes clear installation in this context means putting in place energy saving materials adding if.
Take note of the two underlined parts as both are applicable in order to qualify for the reduced rate of vat.
Value added tax consolidation act 2010 vatca 2010 ref.
The vat incentive for installing energy efficiency measures in residential accommodation is to be amended to bring the uk into line with eu rules hmrc has confirmed.
Scope of reduced vat rate for solar panels narrows.
Huge vat rise on solar panels makes installation entirely uneconomic say experts.
Tax scope of reduced vat rate for solar panels narrows.
Vat is charged at the reduced rate of 5 on the installation of solar panels in or in the curtilage of residential accommodation.
It pays 5 000 for the solar panels and battery excluding vat and charges its customer 7 500 excluding vat for the installation.
Changes to the reduced rate for energy saving.
Labour costs will still benefit from the reduced rate of 5 per cent vat.
At present vat is charged at the reduced 5 rate on the installation of energy saving materials esms including solar panels in residential accommodation.
Following infraction proceedings by the european commission against the uk in 2015 hmrc published a consultation on proposed changes to the vat treatment of energy saving materials.
