Energy Saving Measures

HMRC has confirmed in a recent Business Brief that the 5% reduced rate for installation of energy saving materials in a relevant charitable building will be removed with effect from 1/8/13.

Charities who are considering installation of insulation and similar products in such buildings might want to progress the projects before the changes take effect.

For now, the 5% rate will remain for installations in dwellings and residential buildings however, this is also possibly under threat as HMRC has been challenged by the EU that the relief is not compatible with EU law.

The implementation of “The Green Deal” is likely to raise questions in terms of VAT, in particular the tax point for supplies. It maybe purchasers of goods and services via the green deal have to pay VAT up front so the cash flow implications need to be considered. HMRC has not yet issued any guidance.