As no doubt you are aware in January 2011 VAT is set to rise to 20%. However the VAT on a renewable energy installation will remain at the discounted level of 5%. It was rumoured that the VAT on renewables would rise to 6% but we can confirm that it will remain at 5% next year.
Installation of any of the following qualifies for the lower rate of VAT:
- controls for central heating and hot water systems
- draught insulation (eg around windows and doors)
- insulation on walls, floors, ceilings, lofts, etc
- solar panels
- wind turbines
- water turbines
- ground-source heat pumps
- air-source heat pumps
- micro combined heat and power units
- wood-fuelled boilers
For further information visit the HMRC website.