Explanatory note

This Order, which comes into force on 1st June 2004, amends Group 2 of Schedule 7A to the Value Added Tax Act 1994 (“Group 2”). Schedule 7A contains the Groups of supplies that are subject to the reduced rate of VAT of 5%.

Article 3 of the Order amends Group 2 (installation of energy-saving materials). Paragraph (h) is added to the list in paragraph 1 of the Notes to extend the reduced rate to supplies of the services of installing ground source heat pumps in certain buildings and to supplies of the ground source heat pumps so installed.

By virtue of items 1 and 2 of Group 2, the installation must be in residential accommodation or in a building intended for use solely for a relevant charitable purpose.

A full regulatory impact assessment has not been produced for this instrument as it has no impact on the costs of business, charities or voluntary bodies.