The government will reintroduce VAT relief on energy-saving materials in buildings used for charitable purposes.
The Treasury announced in the Autumn Statement today that it was “expanding VAT relief available on the installation of energy-saving materials in residential buildings or those used solely for a relevant charitable purpose”.
It means that equipment such as heat pumps will be eligible for a 5 per cent VAT rate for installation in charity buildings in the UK from February.
Previously the VAT relief did not include charities and only applied to items such as draught strips, solar panels, central heating system controls, ground source heat pumps and wind turbines.
VAT relief on energy-saving materials for charities was previously offered for 13 years until 2013 but was withdrawn after discussions with the European Commission concluded that the scheme was incompatible with EU law.
Since then, it has only been available for residential and domestic properties.
Richard Sagar, head of policy at the Charity Finance Group, said: “There was once again no explicit mention of charities or the charity sector in the Chancellor’s speech today, and no mention of our huge contribution to supporting a healthy, productive and sustainable economy.
“However, we are delighted that the government has listened to CFG’s calls on a key issue: extending VAT relief on ESMs in buildings intended solely for a relevant charitable purpose.
“Earlier this year, following a survey and consultation with our charity members, CFG called on the government to reinstate relief for the installation of energy-saving materials in buildings used solely for charitable purposes.
“The vast majority of those we consulted, 84 per cent, told us that they intended to install ESMs and would welcome this move.
“For many charities this additional financial incentive might be the difference between installing such measures or not doing so.
“The government’s announcement today is a positive step as it will help support the sector’s shared goal of reducing its energy consumption.”