On 3rd of February 2016, the GGF responded to the HM Revenues and Customs (HMRC) Consultation on “Changes to the reduced rate of VAT for Energy Saving Materials” as published on 9th December 2015.
The GGF’s response on behalf of its Membership outlined concerns regarding the absence of energy efficient glazing in the list of energy saving materials for the reduced rate of 5% VAT. The GGF also urged the UK Government to bring its reduced rates in line with the provisions of a European Directive which permits EU countries to apply reduced rates for “provision, construction, renovation and alteration of housing, as part of a social policy”.
Giles Willson, GGF Managing Director commented, “Replacement windows and doors have not previously been included within the reduced VAT rate despite being vital energy saving products which could legitimately qualify under the criteria described in the European Directive. It is time for the UK Government to comply with EU legislation and to appreciate the importance of energy efficient glazing in the broad economic, social and environmental context.”
The GGF’s response also listed considerations for HMRC to include in the any forthcoming changes to VAT on energy saving materials including;
- Provision for a whole house approach to energy saving materials being used to make properties energy efficient.
- That the primary reason for replacing windows and doors is now for improving energy efficiency (43% - source Palmer Research Report 2014).
- The GGF Membership estimates a growth of 20% in the sector if 5% VAT is awarded. This would be a significant boost to a sector which has been steadily declining since 2002.
To support the response the GGF provided an estimate of the financial impact to the Treasury if windows and doors were to be included in the reduced VAT category and drew comparisons with the increase in other areas of taxable revenue.
The GGF also cited projected market statistics from the Palmer Research Report and highlighted the popularity of the Green Deal pilot which showed that 85% of over 2000 homeowners sampled in 2012 wanted energy efficient glazing.
Should the VAT rate for installation of windows and doors in the domestic sector be reduced to 5%, the GGF has offered to work with Government to develop suitable guidance and training for the industry sector to implement the change within the short timescale and to avoid any confusion in a sometimes complex supply chain.
Giles Willson concluded, “We have collaborated for the last six weeks with our Members, other industry bodies and GK Strategy our political advisors before submitting this response. Our messages are clear and we are willing to meet with officials from HMRC to help them plan a smooth implementation of our proposals should they be included in the policy changes.”
The outcome of the consultation and any changes to the Government’s VAT policy are likely to be released in the summer with any changes being included in the Finance Act in Autumn 2016. Meanwhile the GGF will continue to work with Members, other construction industry trade bodies and Government departments to try and enforce change.