HMRC have launched a new call for evidence ‘VAT energy saving materials relief, improving energy efficiency and reducing carbon emissions’. This examines adding electrical battery storage to the list of qualifying technologies and asks whether more technologies should be added. It also reinstates the relief to buildings used for a relevant charitable purpose.

The installation of certain Energy-Saving Materials (ESMs) in residential accommodation benefits from a VAT relief, previously a reduced rate of 5%, which became 0% from 1 April 2022 until March 2027. Other extensions to the relief were announced at Spring Statement 2022 which are intended to provide incentives worth around £280 million over a five-year period.

The call for evidence published with the Budget 2023 documents asks for views on potential areas to further reform the relief, building on the 2022 extensions, whilst considering that the three key objectives for the relief are:

  1. Improving energy efficiency and reducing carbon emissions.
  2. Cost-effectiveness.
  3. Alignment with broader VAT principles.

The call for evidence proposes two further potential areas of reform:

  • Inclusion of additional technologies, such as battery storage, to the list of qualifying Energy-Saving Materials.
  • Extension of the relief to installations of Energy-Saving Materials in buildings intended solely for a relevant charitable purpose which was not previously possible as it was not compatible with EU law.

Summary of consultation questions

Battery storage

Do you think battery storage should be included in the relief when:

Question 1: Retrofitted to a solar panel or other ESMs (please provide details)?

Question 2: As a standalone technology not connected to another ESM?

If so:

Question 3: Can you explain how this type of battery storage would meet each of the three objectives set out in Chapter 2?

Question 4: Can you explain how this type of battery storage operates?

Question 5: What is the typical cost of installing this type of battery storage in residential accommodation?

Question 6: What are the advantages and disadvantages of including this type of battery storage within the relief?

Other technologies

Are there any other technologies you believe meet our objectives, but do not currently qualify for the relief?

If so, for each technology, can you answer the following questions:

Question 7: How would you describe and define this technology for the purposes of the ESMs relief?

Question 8: How does the suggested technology meet each of the 3 objectives in Chapter 2?

Question 9: Can you explain how this technology operates and does it work in conjunction with other technology? If so, how?

Question 10: What is the typical cost of installing this technology in residential accommodation?

Question 11: What are the advantages and disadvantages of including this technology within the relief?

Are there any technologies which currently qualify for the relief which you believe do not meet the three objectives and should not qualify for the relief?

If so:

Question 12: Which technology does not meet the three objectives?

Question 13: Can you explain why you think that this technology does not meet any of the three objectives and therefore should not be included in the relief?


Question 14: Do you think the relief for the installation of ESMs in a building intended for use solely for a relevant charitable purpose should be reinstated? And if so, why?

Question 15: As a charity are you considering installing ESMs in your buildings?

if yes, what ESMs are you considering installing?

what impact would VAT relief have on this decision?

Question 16: To what extent do you think that charities would benefit from the reinstatement of this relief?

Question 17: What are the advantages and disadvantages of reinstating the relief?

Other issues

Question 18: Are there any other suggestions you have for making the relief more effective and efficient?

Question 19: Are there any other issues that you would like to raise?

How to respond

Responses should be sent to the VAT Reliefs Team by 31 May 2023 by email to This email address is being protected from spambots. You need JavaScript enabled to view it., or by post to:

HM Revenue and Customs
VAT Reliefs Team
7th Floor
14 Westfield Avenue
E20 1HZ

Useful guides on this topic

Spring Budget 2023: at a glance
Freeview summary of the measures announced in the Budget 2023.

Energy-Saving Materials
The supply and fitting of energy-saving materials in residential accommodation attracts a reduced rate of VAT. What does it apply to? What are the qualifying conditions? What case law is there on this topic?

External link

Consultation: VAT energy saving materials relief – improving energy efficiency and reducing carbon emissions

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