Citation and commencement

1. —(1) This Order may be cited as the Value Added Tax (Installation of Energy-Saving Materials) Order 2024.

(2) This Order comes into force on 1st February 2024.

Installation of energy-saving materials from 1st April 2027

2. —(1) In Schedule 7A to the Value Added Tax Act 1994 (charge at reduced rate)( 2 ), in Part 2, Group 2 (installation of energy-saving materials from 1st April 2027)( 3 ) is amended as follows.

(2) In items 1 and 2, for “residential accommodation.” substitute “—

“ (a) residential accommodation, or

(b) a building intended for use solely for a relevant charitable purpose. ” .

(3) In paragraph 1 of the notes (meaning of “ energy-saving materials ”)—

(a) the existing text becomes sub-paragraph (1);

(b) after sub-paragraph (1)(i) insert—

“ (ia) water source heat pumps; ” ;

(c) after sub-paragraph (1)(k) insert—

“ (l) electrical storage batteries within sub-paragraph (2) ;

(m) smart diverters. ” ;

(d) after sub-paragraph (1) insert—

“ (2) An electrical storage battery is within this sub-paragraph if it is intended for use solely for storing energy converted from electricity that was—

(a) supplied to the residential accommodation or building in question, or

(b) generated by a microgeneration system.

(3) In sub-paragraph (2) , “ supplied ” is to be construed in accordance with Part 1 of the Electricity Act 1989 ( 4 ) (see section 64(1) of that Act).

(4) In sub-paragraph (1) (m) , “ smart diverter ” means a device capable of automatically diverting electricity generated by a microgeneration system to one or more appliances, in particular circumstances.

(5) In sub-paragraphs (2) and (4) , “ microgeneration system ” means equipment—

(a) that generates electricity, and

(b) that is itself an energy-saving material for the purposes of this Group. ” .

(4) After paragraph 1 of the notes, insert—

“ Installation of heat pumps

1A. For the purposes of item 1, “ installing energy-saving materials ” includes carrying out groundworks, or dredging a body of water, in order to install pipework or other equipment necessary for the operation of a ground source heat pump or a water source heat pump. ” .

(5) After paragraph 2 of the notes, insert—

“ Meaning of “use for a relevant charitable purpose”

3. For the purposes of this Group a building is used “for a relevant charitable purpose” if it is used by a charity—

(a) otherwise than in the course or furtherance of a business, or

(b) as a village hall or similarly in providing social or recreational facilities for a local community. ” .

Installation of energy-saving materials before 31st March 2027

3. —(1) In Schedule 8 to the Value Added Tax Act 1994(zero-rating), in Part 2, Group 23 (installation of energy-saving materials before 31st March 2027)( 5 ) is amended as follows.

(2) In items 1 and 2, for “residential accommodation.” substitute

“ —

(a) residential accommodation, or

(b) a building intended for use solely for a relevant charitable purpose. ” .

(3) In paragraph 1 of the notes (meaning of “ energy-saving materials ”)—

(a) the existing text becomes sub-paragraph (1);

(b) after sub-paragraph (1)(i) insert—

“ (ia) water source heat pumps; ” ;

(c) after sub-paragraph (1)(k) insert—

“ (l) electrical storage batteries within sub-paragraph (2) ;

(m) smart diverters. ” ;

(d) after sub-paragraph (1) insert—

“ (2) An electrical storage battery is within this sub-paragraph if it is intended for use solely for storing energy converted from electricity that was—

(a) supplied to the residential accommodation or building in question, or

(b) generated by a microgeneration system.

(3) In sub-paragraph (2) , “ supplied ” is to be construed in accordance with Part 1 of the Electricity Act 1989(see section 64(1) of that Act).

(4) In sub-paragraph (1) (m) , “ smart diverter ” means a device capable of automatically diverting electricity generated by a microgeneration system to one or more appliances, in particular circumstances.

(5) In sub-paragraphs (2) and (4) , “ microgeneration system ” means equipment—

(a) that generates electricity, and

(b) that is itself an energy-saving material for the purposes of this Group. ” .

(4) After paragraph 3 of the notes, insert—

“ Installation of heat pumps

4. For the purposes of item 1, “ installing energy-saving materials ” includes carrying out groundworks, or dredging a body of water, in order to install pipework or other equipment necessary for the operation of a ground source heat pump or a water source heat pump.

Meaning of “use for a relevant charitable purpose”

5. For the purposes of this Group a building is used “for a relevant charitable purpose” if it is used by a charity—

(a) otherwise than in the course or furtherance of a business, or

(b) as a village hall or similarly in providing social or recreational facilities for a local community. ” .