We reported previously on the likelihood of Energy Saving Materials losing their 5% VAT rate following the European Court’s ruling against the UK. This is where the UK was found in breach of the EU VAT Directive in that the 5% rate was applied too generously and primarily failed the ‘social’ aspect of the VAT relief.
HMRC have begun a consultation process that inevitably will lead to the removal of the 5% VAT rate – or in certain circumstances retention of the rate but only where the ‘as part of a social policy’ aspect can be met. The proposal is for the relief to be allowed for those in receipt of benefits, over the age of 60 or for specific types of buildings – housing associations and group style accommodation such as care homes and similar.
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