Vat rate for chemical energy storage projects

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FAQs about Vat rate for chemical energy storage projects

What is the VAT rate for energy-saving materials (ESMs)?

Written by Louise Speke. First published on 25 Jan 2024, and most recently revised on 25 Feb 2025. When energy-saving materials (ESMs) are installed, a reduced VAT rate (5%) is usually applied. However, there is a temporary zero rate of VAT which applies until 31 March 2027, after which the rate will revert to the reduced rate.

Which energy-saving materials will have a zero VAT rate in 2024?

Following an extensive consultation, the Government confirmed that from 1 February 2024 the zero rate of VAT will now apply. The installation of certain energy-saving materials (ESMs) in residential accommodation has long enjoyed a zero VAT rate. This preferential VAT rate applied to the more common ESMs including: Wind and water turbines.

When will the VAT zero rate apply to energy-saving materials?

The Government first announced the extension of the VAT zero rate to key energy-saving materials in its Spring 2023 Budget. Following an extensive consultation, the Government confirmed that from 1 February 2024 the zero rate of VAT will now apply.

How will VAT relief impact the energy storage industry?

With VAT relief, installers can offer more competitive pricing, potentially leading to increased demand for energy storage solutions. This, in turn, could drive technological advancements and create job opportunities within the energy storage sector.

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