How is the VAT free insulation policy being implemented

jgrat57

I have a need to insulate my home. What are the practical details regarding the purchase of insulation as a result of the Budget declaration. Do I claim the VAT back retrospectively once purchased or will this be deducted at point of sale.

Thanks

James

Swipe

The price stays the same and seller pockets the difference

BUFF

my current understanding is that it needs to be installed by an approved contractor as per the existing 5% scheme - you can't simply go to B&Q & do the work yourself.

Astria

It only applies to certain Energy Saving Materials (ESMs), installed by a contractor.

There's no discount for DIY'ers.

FreeBear

BUFF said: my current understanding is that it needs to be installed by an approved contractor as per the existing 5% scheme - you can't simply go to B&Q & do the work yourself.

Buying loft insulation from B&Q (at 20% VAT), and installing it yourself is going to work out a lot cheaper than getting an "approved" contractor in (unless you are getting a grant for the work). Loft insulation is probably the easiest job to DIY for most able bodied people.

Just had a look at the rules - https://www.gov.uk/guidance/vat-on-energy-saving-materials-and-heating-equipment-notice-7086 - It makes the task complicated... For example, if you are having insulation installed as part of a bigger job (e.g. reroof), you have to pay 20% VAT on the whole job. Separate it in to two contracts, the reroof is subject to 20% VAT, and the insulation is zero rated as long as the materials are less than 60% of the contract.

It would be down to the contractor to calculate the VAT applicable to the job, and then charge you accordingly.

BUFF

FreeBear said:

BUFF said: my current understanding is that it needs to be installed by an approved contractor as per the existing 5% scheme - you can't simply go to B&Q & do the work yourself.

Buying loft insulation from B&Q (at 20% VAT), and installing it yourself is going to work out a lot cheaper than getting an "approved" contractor in (unless you are getting a grant for the work). Loft insulation is probably the easiest job to DIY for most able bodied people.

Indeed, & I didn't say anything different. My intention was to point out that (obviously it was more ambiguous than I thought) it wasn't available to your normal man in the street  simply going to a shop.
However, a lot of that cavity/loft/floor etc.work is grant funded where people qualify hence why there are companies continuously pushing it..

The 5%>0% reduction really isn't going to make much difference to most people - imagine what difference taking all VAT off insulation, heating controls, boilers, double-glazing etc. at retail might potentially have on owner's behaviour. I would certainly bring forward some upgrades.
Yes, the Chancellor's VAT intake would drop but employment for installers & suppliers would be up so potentially more income tax & less in benefits being paid out..