The Value Added Tax (Reduced Rate) (Energy-Saving Materials) Order 2019

EXPLANATORY NOTE

(This note is not part of the Order)

This Order amends Group 2 of Schedule 7A (charge at reduced rate: installation of energy-saving materials) to the Value Added Tax Act 1994 (c. 23).

It limits the scope of the reduced rate of VAT for energy saving materials following a decision of the European Court as a result of an infraction by the European Commission. It removes from the scope of the relief the installation of wind and water turbines. It also restricts the scope of the reduced rate to installations made in accordance with the UK’s social policy or where the cost of the energy saving materials installed is not seen to be significant in the context of the overall cost of the installation thereby bringing UK law into line with EU law.

Article 3 substitutes new items 1 to 3 for items 1 and 2.

Article 4 inserts new Note A1 that provides for a restriction on item 3.

Article 5 removes wind turbines and water turbines from the list of qualifying energy-saving materials in Note 1.

Article 6 inserts new Notes 4 and 5. Note 4 provides a definition of “qualifying person” and Note 5 provides a definition of “relevant housing association”.

A Tax Information and Impact Note covering this instrument will be published on the website at https://www.gov.uk/government/collections/tax-information-and-impact-notes-tiins.