This page will be updated with News + Events as they arise.
Date: 18 Jul 2008. Source BBC News
Gas bills 'to top £1,000 a year' |
 The price of domestic gas is linked to the rapidly rising global oil market |
Energy bills could rise by more than 60% within the next few years, the UK's biggest domestic energy supplier warns. A report for Centrica, the parent company of British Gas, said annual gas bills could rise from £600 to more than £1,000 early in the next decade. It says continuing high oil prices could lead to rises in the cost of both gas and electricity. |
Date July 21 2007, Source HMRC
Reduced rate VAT on energy-saving materials
When you have certain energy saving materials and equipment installed in your house, you'll be charged a lower rate of VAT than normal. If the materials and equipment go into a new house, you don't pay any VAT at all. Your building contractor should charge these lower rates on the installation work as well as on the materials and equipment itself.
There are only certain materials and equipment that can be charged at the lower rate. However, the range is wider if the job is being funded by a grant, so it's worth seeing if you can get a grant for the installation.
Your building contractor will know what work attracts the reduced rate of VAT and will charge you at the correct rate. This guide gives you an idea of the kind of work that is charged at the lower rate.
On this page:
What qualifies for the lower rates of VAT?
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
You can only get these lower rates if the energy saving materials are actually installed, and the work is done on your home. You'll be charged the lower rate on the installation work itself as well as the materials.
You'll also get the lower rate on any necessary extra work that needs to be done as part of the installation - this doesn't apply if you're having them installed as part of a larger project such as a new roof or building an extension.
Top
What doesn't qualify for the lower rate of VAT?
You can't get the lower rate of VAT on all energy saving materials and equipment. The following aren't covered by the scheme:
- energy efficient boilers
- secondary or double glazing
- low emission glass
- energy efficient fridge freezers
- materials and equipment that you buy without having them installed
However, you may be able to get a grant towards the cost of installing energy saving equipment, some of which then becomes eligible for the lower rate of VAT.
See the section in this guide on grants for energy saving equipment.
Top
Grants for energy saving equipment
If you get a grant towards the installation of certain energy saving equipment, and it's being installed in your main or only home, you'll pay a lower rate of VAT.
If you're 60 or older, you'll get the lower rate on the installation, maintenance or repair of a central heating system, a renewable source heating system and home security goods.
If you get one of the following benefits, you'll get the lower rate on the installation of heating appliances such as specific types of immersion heaters, boilers, storage heaters, gas heaters and radiators:
- child tax credit - other than the family element
- council tax benefit
- disability living allowance
- disablement pension
- housing benefit
- income-based job seeker's allowance
- income support
- war disablement pension
- working tax credit
The reduced rate of VAT also applies to grant-funded repairs and replacements of this kind of equipment, even if the original system was not grant-funded.
Top
Date 05 Aug 2006. Source Energy Technology List
The Enhanced Capital Allowance (ECA) scheme enables businesses to claim 100% first-year capital allowance on investments in energy-saving equipment, against the taxable profits of the period of investment.
All businesses that incur qualifying spending can claim ECAs. ECAs bring forward the time that capital allowances are available for spending on plant and machinery thereby providing a cash flow advantage.
A higher standard of energy-saving
Capital allowances enable businesses to write off the capital cost of purchasing plant and machinery, for example equipment such as boilers and motors, against their taxable profits. They take the place of depreciation charged in commercial accounts
The general rate of capital allowances is 20% a year on a reducing balance basis. For example, if a business spent £1,000 on a new boiler, it could claim capital allowances of £200 (20% of £1,000) against the taxable profits of the period of investment. Assuming the company pays corporation tax at 28%, the effect of the capital allowance for spending on the boiler in the period of investment would be to reduce the business’s tax bill by £56 (£200 @ 28%).
The unrelieved balance of £800 (£1,000 less £200) is carried forward for relief against profits of later years. In this way the spending is written off over a number of years.
If, however, the business invested the same amount in a high efficiency boiler from the Energy Technology Product List, it could claim an 100% first-year capital allowance of £1,000 against the taxable profits of the year of investment. Again assuming the company pays corporation tax at 28% the effect of the first-year allowance would be to reduce the business’s tax bill by £280 (£1,000 @ 28%). Thus, the first-year allowance can confer a cash flow advantage.
The 100% first-year capital allowance relieves all the qualifying spending. Therefore there is no unrelieved spending to carry forward against profits of later years.
