VENSAV2010 | History of the reduced rate: introduction of the relief in 1998

The VAT (Reduced Rate) Order 1998 (Statutory Instrument 1998/1375) introduced a reduced rate of 5% VAT for the grant-funded installation in the homes of less well-off people (those on certain specific benefits) of the following energy-saving materials:

• insulation for walls, floors, ceilings, roofs, lofts, water tanks, pipes and other plumbing fittings

• draught stripping for windows and doors

• central heating system controls, and

• hot water system controls.

This relief applied to supplies made on and after 1 July 1998. The effect of the order was to add new provisions to the then Reduced Rate Schedule, Schedule A1 to the VAT Act 1994. This was done to make the grant-funding go further, allowing more vulnerable households to benefit.

The relief covered all the supplies made under the Government’s Home Energy Efficiency Scheme (HEES) (known as the Warm Front Scheme since 2000), to the extent that the installation was paid for by grant-funding.