VAT rules risk hindering energy efficiency drive, warns CIOT

The benefits of expanding tax relief for the installation of energy-saving materials (ESMs) in buildings may not be fully realised unless the government puts in place special rules enabling relief to be granted even where the installation is part of wider refurbishment work according to the Chartered Institute of Taxation.

The government has set a target to reduce the UK’s overall energy consumption from buildings and industry by 15% by 2030 compared to 2021 levels. One of the ways it is encouraging businesses to deliver this is through VAT ESM relief. This temporary relief which applies to the installation of solar panels heat pumps and insulation among other things is due to end on 31 March 2027

In the Spring Budget 2023 the government published a call for evidence on whether to expand the relief to include additional technologies such...