Did you know that as a plumbing and heating company, there are certain circumstances when you can charge 5% VAT? 

This applies with the installation of many energy saving products, however there is criteria to be met.

The information in the article was correct at the time of writing, but we recommend you check before you apply the reduction to your installations as conditions could change.

You can find the most up to date information here for traders and here for consumers.

In order for the consumer to qualify, they must not install the product themselves. That’s where you come in…

The discount applies to residential installations and covers products such as:

  • controls for central heating and hot water systems
  • draught stripping, for example insulation fixed around windows and doors to reduce draughts
  • insulation on walls, floors, ceilings and lofts solar panels
  • ground-source heat pumps
  • air-source heat pumps
  • micro combined heat and power units
  • wood-fuelled boilers

Not all installations qualify.

Here is a list of exclusions:

  • heating appliances or systems – unless you get an energy efficiency grant
  • energy efficient boilers
  • secondary or double glazing
  • low emission glass
  • energy efficient fridge freezers
  • wind turbines
  • water turbines

If you are unsure if a product you are installing qualifies, Gov.uk has provided the following guidance.

If you are supplying the product only but not installing it, you must charge the standard rate of 20% VAT.

In order for your customer to qualify for the reduced rate there are two elements to consider, first being customer profile.

If the customer is over 60 years old or getting one or more of the following, then the reduce rate of 5% would apply:

  • Child Tax Credit (but not the family element)
  • Council Tax Benefit
  • Disability Living Allowance
  • Personal Independence Payment
  • a disablement pension
  • Housing Benefit
  • Jobseeker’s Allowance (income-based)
  • Income Support
  • War Disablement Pension
  • Working Tax Credit

The second way your customer can qualify is if the 60% rule applies. Let me explain….

If you are supplying and installing but the product cost more than 60% (not including VAT) of the installation cost, the reduced rate would apply to the installation only.

If you are supplying and installing, provided the products cost less than 60% (not including VAT) of the installation, you can charge the reduced rate on both.

It is your responsibility to make sure you charge the correct rate of VAT and being knowledgeable on this could help you win more business.

If you would like to discuss the information in this article further, then please do not hesitate to get in touch.




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