Explanatory note

This Order, which comes into force on 1st July 1998, amends Schedule A1 to the Value Added Tax Act 1994 (c. 23) (Charge at Reduced Rate). It introduces a new relief for supplies, to the less well-off of the service of installation of energy saving materials (and supplies of those materials when made by the person installing them) to the extent to which they are funded by grants under certain schemes. Supplies to which the new relief applies will be taxed at 5 per cent (the same reduced rate of VAT that applies to supplies of fuel and power for domestic use).

Article 3 of the Order creates the new relief by inserting an amended paragraph 1(1) into Schedule A1.

Articles 4 and 5 make consequential amendments resulting from the amendment to paragraph 1(1).

Article 6 defines the people who, for the purposes of the relief, are less well-off. They are people receiving at least one of the benefits listed in the new paragraph 5(3) inserted into the Schedule or people who are aged 60 or more. The article also describes the materials in respect of which relief is given as insulation for various parts of the structure of a house and its plumbing system, draught stripping, and central heating and hot water system controls. Finally, this article defines grant schemes from which funding for supplies must come if the relief is to apply.