VAT rate for energy-saving materials in residential buildings in Great Britain cut to 0%

The VAT rate charged on energy-saving materials installed in residential buildings in Great Britain is now 0%, according to HM Revenue & Customs guidance on VAT rates for goods and services¹. The guidance states: "The VAT rate for energy-saving materials in residential buildings in Great Britain is now 0%"¹.

The relief applies to materials that are permanently installed, and HMRC lists the covered items with a 0% rate. These include air source heat pumps, wood fuelled boilers, central heating and hot water controls, draught stripping and ground source heat pumps¹. The guidance states that "these energy saving materials are subject to VAT relief at 0% until 31 March 2027"¹.

Two points in the same guidance sit alongside the 0% rate. Materials supplied on their own, without installation, remain standard-rated: "Energy-saving materials, supply only, are standard-rated"¹. The guidance also carries a separate entry stating that energy-saving materials permanently installed in dwellings and buildings used for a relevant residential purpose are charged at 5%, where the total cost of the materials (excluding VAT) is not over 60% of the cost of the installation (excluding VAT)¹. The page does not reconcile these entries, and it does not set out how the 0% rate and the 5% entry apply in individual cases.

The 0% rate is described as applying in Great Britain¹. The guidance does not state the position for Northern Ireland in the passages covering energy-saving materials.

Why it matters for households

The rate affects what is charged on the materials element of an installation in a residential building in Great Britain. Where the 0% rate applies, no VAT is added to those materials, so the amount billed for that part of the work is lower than it would be at the standard rate. The relief is time-limited: the guidance says it runs until 31 March 2027¹. Households having such work done, and the installers charging them, are the parties affected. The guidance does not say what rate applies after that date.

The distinction between installed materials and supply only matters for the total bill. A household buying materials to fit itself, rather than paying for installation, is not covered by the 0% entry as the guidance describes it¹. The separate 5% entry, with its 60% cost condition, is also set out on the same page¹.

What happens next

The guidance gives 31 March 2027 as the date until which the 0% relief applies¹. No further change to the rate for energy-saving materials is set out in the guidance. The same page records other VAT changes with later dates, including a temporary reduced rate for certain supplies of children's meals, tickets and family attractions from 25 June 2026 to 1 September 2026¹.

For background on VAT and property work, see the guide to building your own home, and the tax and home-buying sections.