Zero rate of VAT for solar panel products

The Value Added Tax (Installation of Energy-Saving Materials) Order 2022 Given you say that the installer must also supply the materials in order to get the VAT exemtion on materials: With a DIY the installer is one's self and therefore when he procures the materials ( retail) he is the installer and provider and thus should not have to pay VAT on materials at purchase? Is this right?

Hi flaggs2021,
The relief for energy saving materials is only applicable where energy saving materials are provided and installed by the supplier.
If you purchase energy saving products from a shop then if the shop are also not installing the goods then they would need to charge you 20% VAT on the goods.
The relief of 0% VAT is only relevant for goods where they are also installed by the same supplier.
The 0% VAT relief can also apply to an installation charge by a builder where you buy the materials yourself but of course you will only get the relief from the installation work,not the goods which you have purchaed yourself elsewhere.
Thank you. 

Hi, I am developing a property into residential flats and having solar panels installed for them. My installer claims that this cannot be zero rated as the developer is a limited company. I don't see the relevance here, as VAT Notice 708/6 paragraph 2.1 makes no reference to Limited Companies. The only condition seems to be that the solar panels be for the benefit of a residential dwelling, which this property will be. Can you please confirm?

Hi HMRC, I have a few questions on zero vat for a residential install. Can I purchase the materials from a supplier and have a different company install it? If the supply and install has to be the same company, Are there any limitations on who can be subcontracted for a solar installation. Do they need to be mcs certified, for example? Are there any other limitations as I couldn't find on the UK gov info pages. From Feb the 1st 2024, will a home owner be able to add a battery to his home with zero vat or only if it is installed by someone else? Are there limitations on who the battery must be installed by? Is there a difference when retrofitting a battery to a hybrid inverter and installing a new inverter and battery? Thank you

Hi HMRC, If the home owner purchases most of the equipment himself, such as the inverter and mounting and only has the installer provide the solar panels, would this be zero vat for the panels and installation?

I am still very confuised. Assume I am an installer, qualifed to do the installation, not VAT registered. Of course my installation work is Zeros VAT rated. OK, I also shall supply the goods for the installation, so VAT zero rated. BUT I have to buy the goods from a wholesaler and he is charging me VAT..? Surely a wholesaler supplying goods to a 'retail supplier and installer', shold NOT be chnaring VAT... OR Do I get to reclaim that VAT I paid the wholesaler?

Hi Amit Shah,
The installtion of solar paneals should benefit from the relief if these are installed in to a residential building regardless of who the customer is.
Please see below:
2. Installations of energy-saving materials
Thank you.

Hi Ben Stross,
If you purchase energy saving materials yourself then you will be charged 20% VAT on the materials.
The materials can only benefit from the relief if the supplier installs the goods or subcontracts the installation to another builder.
There will be changes to the energy saving reliefs from February 2024  and there will be more information provided on the website regarding this.
At the moment we have only produced a Consulation Outcome but Notice 708/6 will be updated prior to 1st February to include specific guidance regarding batteries and the conditions necesaary to benefit from the relief.
Consultation outcome Summary of responses Updated 11 December 2023
Thank you.

There was a useful thread on the forum called 'VAT on EV Chargers when installed with PV systems', but this has been deleted for some reason. I am trying to establish whether the installation of a solar-compatible EV charger would qualify as ancillary to the supply if installed at the same time as a qualifying ESM (either solar or battery, or both), and would therefore be supplied and installed at the zero rate. Thanks The original forum thread was here (now gone!) https://community.hmrc.gov.uk/customerforums/vat/30f5ef64-fce0-ec11-b5cf-00155d9c774f

Hi Admin 20, Thank you for your response. Can you specify or send me a link to who is allowed to be a subcontractor or if anyone one is not allowed to be.

Hi flaggs2021,

A wholesaler would need to charge you the VAT on the materials if he is supplying materials only and not installing them.

The relief for energy saving materials covers the provision of materials and installation when provided together or the installation if the materials are not provided.

The relief does not cover the supply of materials only and so would correctly be charged at 20%.

Unfortunately you can not claim this VAT back.

Thank you.

 

Hi Ben Stross,
There is no specific definition of a sub contractor for VAT purposes and so a subcontractor would be eligible as part of this broader definition here:
CISR13020 - The Scheme: subcontractors: definition of subcontractor
Thank you. 

Hi, circling back to my question above, which is still not answered - copied again below. Thanks! There was a useful thread on the forum called 'VAT on EV Chargers when installed with PV systems', but this has been deleted for some reason. I am trying to establish whether the installation of a solar-compatible EV charger would qualify as ancillary to the supply if installed at the same time as a qualifying ESM (either solar or battery, or both), and would therefore be supplied and installed at the zero rate. Thanks The original forum thread was here (now gone!) https://community.hmrc.gov.uk/customerforums/vat/30f5ef64-fce0-ec11-b5cf-00155d9c774f

Hi automotive,
If the EV charger  is installed at the same time as the qualifying ESM, it constitutes a single supply of services, it would therefore qualify for the zero rate relief.
Thank you.
 

Hi Can you please advise, an online supplier/installer is offering 0% VAT with a fee for homeowners, where the installation is sub-contracted to the homeowner to self-install. Is this legal? Here is the email received when asking about this: "Many are now aware from researching various supplier websites that the Government announcement of 0% VAT for battery storage was a little misleading and is only valid for full installations and not for supply only just as solar has been since the solar VAT change in 2022. ITS do have a solution though for DIY consumer customers or those wishing to work with their own installer to help save money on your project costs. For orders from a consumer (cannot be purchased through a business), ITS will include an installation fee to your order therefore making it zero rated for VAT and then pay an installation fee back to you as a sub-subcontractor for you to install your own products. To cover our administration costs of the additional work and the expense of cash flowing the 20% vat that you save, we charge 6% of the order value (not including the installation fee) which will be deducted from the installation fee we pay back to you. Following payment of your order simply provide your bank details for the fee to be paid within 24hrs."

Hi, The energy saving relief is only available for energy saving products when installed by a supplier. If a supply only makes a sale of an energy saving product this will not be covered under the relief. So if the supplier is only selling you the materials and not installing them then the sale of these products should carry VAT at 20%. If you feel you should report this company then please see the link below: https://www.gov.uk/report-tax-fraud  . Thank you  .

 

Hi HMRC Admin 17 A member of the public has noted that a VAT registered trader is potentially abusing the VAT zero rating legislation, could you not make a call to a colleague in the VAT team and ask them to enquire into the business? The idea of charging a customer for installation which never takes place (by the supplier) and then crediting the customer with the cost of installation back via a bank credit (no invoice) at least seem contrived. If one supplier is doing it, then give it a few months and several more will be doing it guaranteed.

Hi Jason Croke,
As this is a public forum we are unable to take specific details of companies and act upon any advice
However, we would recommend always reporting fraudulent activity via the link below:
Report tax fraud or avoidance to HMRC
Thank you. 

Given that a VAT registered company sells solar materials and equipment ONLY (no install) to consumers for DIY use the supply is standard rated (20%). Are there any exceptions?

I am Joe Public, I am retired but not of pensionable age, living in a privately owned house with no special requirements… not a care home, not on low income or income related state benefits, not rebuilding, not refurbishing (except having the roof re-tiled) or anything else along those lines. I entered into a contract (Jan ‘24) to purchase a complete solar system from a company who directly imports the systems from China and is VAT registered. No installation is offered by this company and at the outset of the contract they were informed this will be a DIY install by me (not VAT registered). The company was (and is) adamant that the supply to me (consumer) is Zero rated. Upon reading this forum I believe the supply should be Standard rated and so I cancelled the contract immediately and informed the company of my findings. The company is still adamant that the supplies should be Zero rated and is now trying to force me (quite vociferously) to continue the contract or pay a hefty penalty. Have I been mistaken? Is there ANY possibility that the supplies should be Zero rated?