Country:United Kingdom
Policy status:In Force
Date Effective:1998
Policy Type:Economic Instruments>Fiscal/financial incentives>Tax relief
Policy Target:Buildings>Residential, Appliances
Agency:HM Treasury
Description:In 1998 the Government introduced a reduced value-added tax (VAT) rate of 5% (down from 17.5%) for the grant-funded installation of certain energy-saving materials (ESMs) in the homes of elderly, less well off and vulnerable households. This reduced VAT rate applied to all insulation, draught stripping, hot water, and central heating controls. In Budget 2000, the Government extended this scheme to all households, even if the service is not grant funded. Budget 2000 and 2002 also introduced further reduced VAT rates for ESMs when they are part of grant-funded installations into vulnerable households — including central heating systems, heating appliances, and factory-insulated hot water tanks. The 2004 Budget announced reduced VAT for ground source heat pumps, and the 2005 Budget extended this to air source heat pumps. The 2005 and 2006 Budgets also announced reduced VAT to encourage microgeneration technologies for use by individual households. These include small wind turbines, solar panelsand microcombined heat and power (CHP) units. The 2007 Budget further confirmed this commitment to maintaining reduced VAT for microgeneration technology.

Last modified: Tue, 17 Jul 2012 12:21:29 CEST