- Zero rate of VAT on home installation of energy-saving
materials comes into effect in Northern Ireland today [1 May
2023].
- VAT relief is worth £915 million for the UK over the next
four years.
- The Windsor Framework allows the relief to be extended to
Northern Ireland, following it taking effect in the rest of the
UK last year.
Households in Northern Ireland can now take advantage of a
UK-wide £915 million tax relief to make their homes more
efficient and drive down their energy bills.
From today (1 May 2023) installing energy-saving materials into
Northern Irish homes, such as home insulation, solar panels, heat
pumps and wind turbines, will have a zero rate of VAT – thanks to
the Windsor Framework agreed by the UK and EU earlier this year.
This cost of living boost comes in addition to £94 billion of
committed support across the UK since 2022. This includes the
extension of the 5p fuel duty cut by an extra year, increased
National Insurance thresholds and uprating the state pension in
line with inflation.
, Financial Secretary to
the Treasury, said:
“Wherever you are in the UK, anything which can reduce your
energy bill will be very welcome. Thanks to the Windsor
Framework, households in Belfast can save thousands modernising
their homes to save on future energy bills in, the same way as
they do in Birmingham, Barry or Banffshire.”
Households can install technologies which will help bring their
bills down, saving them money in the long term. The technology
makes their homes warmer and more efficient at a reduced cost
thanks to the VAT cut.
The VAT cut has been in effect in the rest of the UK since 1
April 2022 and saves households as much as £2,000 each on the
cost of a typical heat pump installation.
As well as helping make homes far more energy efficient, these
technologies will also help the UK get closer to net zero and
improve the country’s energy security. This is the latest step in
supporting families in Northern Ireland to reduce their energy
bills, building on the Energy Price Guarantee which is helping
deliver one of the government’s five priorities, to halve
inflation.
, Secretary of State for
Northern Ireland, said:
“It is wonderful to see that the Windsor Framework is already
benefiting people in Northern Ireland. This is evidenced by
today’s very welcome news that NI households will now receive the
same support on installation of energy saving materials which the
rest of the UK have had since 2022, but until now was unavailable
in Northern Ireland due to the Protocol.
“This realignment is one of many measures delivered by the
Windsor Framework to bring positive change for the people of
Northern Ireland.”
David Cowdrey, Director of External Affairs at MCS
Charitable Foundation said:
“The new VAT rules for Northern Ireland mean it is more
affordable than ever to install domestic renewables like heat
pumps and solar panels, as well as making it cheaper to insulate
your home.
“The zero rating of VAT on energy efficiency materials and
upgrades will help households to keep their homes warm and bills
low and will be a big step towards energy security.”
The zero rate is in place until 31 March 2027 and across the UK
the full relief will provide £915 million of support for
investment for energy saving materials over the next four years.
The changes coming into effect today in Northern Ireland also
permanently remove complex eligibility conditions and re-instate
wind and water turbines on the list of qualifying technologies.
After March 2027 the relief will still be in place across the UK
at the reduced rate of VAT at 5 per cent.
The tax cut was introduced in Great Britain at Spring Statement
2022 but could not be introduced in Northern Ireland because of
the Northern Ireland Protocol.
The Windsor Framework though means UK decisions on tax and spend
benefit people and businesses in Northern Ireland as they do the
rest of the UK.
The framework represents a turning point for Northern Ireland. It
protects the economic rights of the people of Northern Ireland
and provides the people of the UK with the basis to move forward
together as one united country.
The government has also launched a call for evidence to explore
bringing new, green technology into the scope of the relief and
extending the relief to include buildings used for charitable
purposes.
ENDS
Further Information
