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EU-UK Windsor Framework – Northern Ireland energy saving zero-rating VAT

NI Protocol replacement unblocks 2022 VAT zero-rating on domestic energy saving supplies for Northern Ireland from 1 May 2023

The UK’s HMRC has confirmed installations of domestic energy saving supplies in Northern Ireland will soon enjoy the same 2022 zero-rating VAT rate as the rest of the UK. The announcement follows last week’s ratification of the Northern Ireland Windsor Framework by the UK and EU. This updates the terms of Northern Ireland’s continuing dual positing in the EU-UK trade, customs and VAT regimes for goods only.

The UK reduced the VAT rate on domestic energy saving measures from 5% to 0% from April 2022 until 31 March 2027. Prior to Brexit, and the UK leaving the EU VAT regime at the start of 2021, this reduction was not possible (although since changed in 2022 with new EU VAT rate freedoms). Following Brexit, this restriction was lifted except for Northern Ireland under the terms of the NI Protocol and VAT rules. This prevented divergence from the EU goods’ rate rule as part of the no-border settlement.

EU-UK VAT joint committee

The Windsor Framework now includes new flexibility and scope for cooperation on rates, establishing new categories that can be applied for VAT purposes where goods are consumed in Northern Ireland. The EU and UK have now formed a joint committee to review which products may or may not enjoy the UK rates – with the focus on goods that cannot or unlikely to be transported into the EU from Northern Ireland. Installation of energy-saving domestic supplies are the first goods to be granted a waiver from the EU VAT rules.

The VAT change will be given effect through a piece of secondary legislation known as a Statutory Instrument.

Getting Brexit VAT right

Understanding and correctly applying the UK-Northern Ireland-EU VAT rules is complex and risky. VATCalc’s tax engine and VAT returns filer technologies, on a single application, already contain the rules enshrined in the Brexit Withdrawal Agreement and Windsor Framework. Contact us for a short demo of our tech.



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