Welcome to the first VATwatch of 2024. I hope you had a wonderful Christmas and New Year and are looking forward to the year ahead.

Huge thanks to Andy Read and Adam Walker for inviting me onto their podcast. This is the first one I’ve ever done, so way out of my comfort zone, but we had a lovely time chatting about VAT, tech, and loads of other business issues.

Changes to VAT on Energy Saving Materials

The government will be expanding the relief by bringing the following technologies within scope of the zero rating:

• electrical battery storage
• water-source heat pumps
• diverters retrofitted to ESMs such as solar panels and wind turbines

The relief will also be extended to the installation of all qualifying ESMs in buildings used solely for a relevant charitable purpose and will continue to apply when these ESMs are installed in residential buildings.

A discrete list of groundworks necessary for the installation of certain types of heat pumps will also be brought within scope of the relief, thus allowing all aspects of the installation of ground-source and water-source heat pumps to be relieved of VAT, even those activities that are co-contracted.

The government intends to implement these reforms on 1 February 2024.   

VAT on Refer a Friend Discounts

The Bulb Energy Case concerned discounts given to customers in return for referring friends to the energy supplier. Did they or did they not reduce the amount of income on which VAT should be declared?

Who Benefits from Zero Rating?

Following zero rating on Energy Saving Materials, and Period Pants, I’ve written for AccountingWeb considering who benefits from the reduction in VAT. It would be interesting to know what your thougths are on this.

Thank you for taking the time to read this VATwatch round-up.