VALUE ADDED TAX Citation and commencement 1 1 This Order may be cited as the Value Added Tax (Installation of Energy-Saving Materials) Order 2024. 2 This Order comes into force on 1st February 2024. Installation of energy-saving materials from 1st April 2027 2 1 In Schedule 7A to the Value Added Tax Act 1994 (charge at reduced rate) , in Part 2, Group 2 (installation of energy-saving materials from 1st April 2027) is amended as follows. 2 In items 1 and 2, for “residential accommodation.” substitute “— a residential accommodation, or b a building intended for use solely for a relevant charitable purpose. . 3 In paragraph 1 of the notes (meaning of “ energy-saving materials ”)— a the existing text becomes sub-paragraph (1); b after sub-paragraph (1)(i) insert— ia water source heat pumps; ; c after sub-paragraph (1)(k) insert— l electrical storage batteries within sub-paragraph (2) ; m smart diverters. ; d after sub-paragraph (1) insert— 2 An electrical storage battery is within this sub-paragraph if it is intended for use solely for storing energy converted from electricity that was— a supplied to the residential accommodation or building in question, or b generated by a microgeneration system. 3 In sub-paragraph (2) , “ supplied ” is to be construed in accordance with Part 1 of the Electricity Act 1989 (see section 64(1) of that Act). 4 In sub-paragraph (1) (m) , “ smart diverter ” means a device capable of automatically diverting electricity generated by a microgeneration system to one or more appliances, in particular circumstances. 5 In sub-paragraphs (2) and (4) , “ microgeneration system ” means equipment— a that generates electricity, and b that is itself an energy-saving material for the purposes of this Group. . 4 After paragraph 1 of the notes, insert— Installation of heat pumps 1A For the purposes of item 1, “ installing energy-saving materials ” includes carrying out groundworks, or dredging a body of water, in order to install pipework or other equipment necessary for the operation of a ground source heat pump or a water source heat pump. . 5 After paragraph 2 of the notes, insert— Meaning of “use for a relevant charitable purpose” 3 For the purposes of this Group a building is used “for a relevant charitable purpose” if it is used by a charity— a otherwise than in the course or furtherance of a business, or b as a village hall or similarly in providing social or recreational facilities for a local community. . Installation of energy-saving materials before 31st March 2027 3 1 In Schedule 8 to the Value Added Tax Act 1994 (zero-rating), in Part 2, Group 23 (installation of energy-saving materials before 31st March 2027) is amended as follows. 2 In items 1 and 2, for “residential accommodation.” substitute — a residential accommodation, or b a building intended for use solely for a relevant charitable purpose. . 3 In paragraph 1 of the notes (meaning of “ energy-saving materials ”)— a the existing text becomes sub-paragraph (1); b after sub-paragraph (1)(i) insert— ia water source heat pumps; ; c after sub-paragraph (1)(k) insert— l electrical storage batteries within sub-paragraph (2) ; m smart diverters. ; d after sub-paragraph (1) insert— 2 An electrical storage battery is within this sub-paragraph if it is intended for use solely for storing energy converted from electricity that was— a supplied to the residential accommodation or building in question, or b generated by a microgeneration system. 3 In sub-paragraph (2) , “ supplied ” is to be construed in accordance with Part 1 of the Electricity Act 1989 (see section 64(1) of that Act). 4 In sub-paragraph (1) (m) , “ smart diverter ” means a device capable of automatically diverting electricity generated by a microgeneration system to one or more appliances, in particular circumstances. 5 In sub-paragraphs (2) and (4) , “ microgeneration system ” means equipment— a that generates electricity, and b that is itself an energy-saving material for the purposes of this Group. . 4 After paragraph 3 of the notes, insert— Installation of heat pumps 4 For the purposes of item 1, “ installing energy-saving materials ” includes carrying out groundworks, or dredging a body of water, in order to install pipework or other equipment necessary for the operation of a ground source heat pump or a water source heat pump. Meaning of “use for a relevant charitable purpose” 5 For the purposes of this Group a building is used “for a relevant charitable purpose” if it is used by a charity— a otherwise than in the course or furtherance of a business, or b as a village hall or similarly in providing social or recreational facilities for a local community. . Joy Morrissey Amanda Milling Two of the Lords Commissioners of His Majesty's Treasury 10th January 2024