Self BuildersEnergy Efficient Retrofit
Qualifying energy-saving materials installed by a contractor in your home are currently zero-rated at 0% VAT — but the relief is applied at the point of invoicing, and it depends entirely on how the work is packaged and contracted. A bundled quote with a general builder, or materials you bought yourself, can cost you the 0% rate without either party realising it.
Unlike new builds (VAT431NB) and qualifying conversions (VAT431C), energy retrofit of an existing home does not qualify for a DIY Housebuilders Scheme reclaim. The 0% VAT rate on qualifying energy-saving materials is applied at the point of invoicing by the contractor. If your contractor charges 20% on a line that qualifies for 0%, your only route to correct it is to ask them to reissue the invoice — and that becomes significantly harder once the project is complete.
The qualifying ESM rate is applied to the supply — not to the technical measure. A heat pump or insulation installation that qualifies technically can still be charged at 20% if the package structure means HMRC's single-supply rule applies the rate of the dominant general building works to the whole contract. Conversely, genuinely separate specialist packages can preserve the 0% rate for the qualifying elements. Getting this right requires reviewing the structure before contracts are agreed.
The 0% ESM rate requires supply-and-install by the contractor — the same contractor must supply the materials and carry out the installation.
Where qualifying ESM is incidental to a general building contract, the single-supply rule applies the 20% rate of the dominant supply to the whole package.
Genuinely separate specialist packages — insulation installer on one contract, general builder on another — can each carry their correct rate.
The 0% rate is determined by the invoice date, not the contract date or payment date. Supplies invoiced after 31 March 2027 will be at 5%.
Each card links to a detailed answer covering the HMRC rules, the distinction that matters, and what to do next.
Insulation, heat pumps, solar PV, and other measures can qualify — but only under specific conditions. Find out what HMRC Notice 708/6 requires.
It may be an overcharge. Qualifying ESM supply-and-install should be at 0% until March 2027. The answer depends on how the work is packaged.
Mixed projects can carry more than one rate. HMRC's single-supply rule determines which rate applies to each element — and how the contract is structured matters.
Yes. The 0% ESM rate requires the same contractor to supply and install. If you buy materials and a contractor fits them, both supplies are at 20%.
Some ancillary works integral to the ESM installation may qualify; others are standard-rated general building works. The line is not always obvious.
From 1 April 2027 qualifying ESM reverts to 5%. The rate is determined by the invoice date, not the contract date. Projects spanning the cut-off carry two rates.
No. Listed building status provides no general VAT advantage on retrofit works. The ESM 0% rate analysis is the same for listed and unlisted domestic buildings.
Air-source and ground-source heat pumps are qualifying ESM — but the 0% rate applies only when the contractor both supplies and installs, and the heat pump is the principal supply.
Each qualifying measure has its own conditions, packaging considerations, and rate. Select the area that applies to your project.
Cavity wall, solid wall (internal and external), loft, roof, floor, and underfloor insulation supplied and installed by a contractor in a domestic building qualify for the ESM zero rate. From 1 April 2027 the rate reverts to 5%.
Air-source and ground-source heat pumps, including qualifying preparatory and ancillary works, are qualifying ESM when supplied and installed by a contractor as the principal supply. From 1 April 2027 the rate reverts to 5%.
Solar photovoltaic panels, solar thermal systems, wind turbines, and water turbines supplied and installed by a contractor in a domestic building are qualifying ESM. Battery storage may qualify where included within a qualifying solar installation.
Central heating controls, hot-water controls (including thermostats and boiler controllers), and draught stripping are qualifying ESM. The supply-and-install requirement applies: materials purchased by the homeowner are at 20%.
A whole-house retrofit combining qualifying ESM with general renovation (roofing, plastering, structural works, kitchen, bathrooms) can carry both 0% and 20% — if the qualifying elements are genuinely separately contracted. HMRC's single-supply rule governs the analysis.
VATBuild identifies which elements of your retrofit project are qualifying energy-saving materials under HMRC Notice 708/6 and which are general building works — before you upload a single invoice.
Every invoice line is assessed against the applicable HMRC rate for that element. Qualifying ESM supply-and-install lines, general building works, and ancillary works are each assessed separately.
Where a contractor appears to have charged 20% on a line that may qualify for 0% — for example, a specialist insulation supply-and-install — VATBuild flags it and identifies which invoices may need further review.
VATBuild detects invoices that bundle qualifying ESM with general building works at a single rate, and prompts you to request itemisation before payment — before the rate is locked in.
Every line item is documented with its VAT classification, the HMRC rule that applies, and a plain-English reason. Uncertain matters are flagged for specialist review rather than assumed.
The earlier in the project you start, the more can be clarified before invoices are issued.
Set up your project and map which measures qualify under Notice 708/6 — before any packages or contracts are agreed.
Check whether contractor quotations correctly separate qualifying ESM elements. VATBuild identifies where a bundled quote needs itemising.
Upload invoices as they arrive. VATBuild checks the rate on each line and flags any invoice that needs clarification before you pay.
If you have already paid invoices where 20% was charged on potentially qualifying ESM, VATBuild identifies which ones and generates a review report for each contractor.
Run a full VAT rate check of all invoices after completion to confirm each qualifying element was correctly rated and identify any remaining matters to follow up.
Set up your project free — VATBuild maps your ESM elements against Notice 708/6 and checks each invoice line as it arrives. No obligation, no HMRC claim submission required.
VATBuild provides structured decision support. Formal or uncertain VAT matters are referred for specialist professional review.