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VAT on energy-saving products to rise in compliance with EU legislation.
The government has confirmed that the reduced 5% rate of VAT on the installation of energy-saving products will rise to 20% in 2016.
This is due to EU legislation which states that the reduced rate should apply to social housing only not residential property in general.
Alan Pearce VAT partner at Blick Rothenberg said: “Although HMRC have said any changes would not be introduced until the Finance Act 2016 this is almost certain to result in a significant rise in the cost of installations. Therefore anyone thinking about installing such products should do so sooner rather than later.”
The Court of Justice of the EU ruled that the reduced rate had been implemented too widely in the UK. The relief should be restricted to installations that were “part...
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