Press release

23 Mar 2022 London, GB

EY – Spring Statement: VAT relief on Energy Saving Materials

Following what was the hottest weekend of the year so far, the Chancellor announced that it will reverse a Court of Justice of the European Union ruling which had previously restricted VAT relief on energy saving materials (ESMs).

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Sarah Delaney, EY Director in Indirect Tax, commented:

“Following what was the hottest weekend of the year so far, the Chancellor announced that it will reverse a Court of Justice of the European Union ruling which had previously restricted VAT relief on energy saving materials (ESMs).  As well as adding wind and water turbines to the list of ESMs, the Chancellor is introducing, from next month, a time-limited 0% VAT rate on the installation of solar panels and thermal installation.

“Whilst the Chancellor mentioned savings of £1,000 in his speech, it is perhaps questionable how many people will be able to afford (in the next five years) the £20,000 outlay needed to benefit from such a saving. Nevertheless, this is likely to provide a welcome boost to suppliers of ESMs, who will need to consider the systems, contractual, pricing, invoicing and commercial implications of the changes - particularly in light of the short lead time ahead of the changes.”

For all our Spring Statement analysis visit our dedicated web page.