Heating and water installation is inside CIS. And the zero rate on installing energy-saving materials — heat pumps, heating controls, insulation — ends on 31 March 2027. That date is the most commercially significant thing in this trade.
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Find out moreGas engineers · CIS scope
Installing systems of heating, water supply, sanitation and drainage in a building or structure is expressly a construction operation, so gas and heating installation is inside CIS. Repair and alteration of buildings generally is too. Excluded is the manufacture of components for those systems and their delivery to site.
The commercially significant point for this trade is a date.
Installing energy-saving materials in residential accommodation has been zero-rated since 1 May 2023. From 1 April 2027 it reverts to the 5% reduced rate. Build that date into how you quote work that will be installed either side of it.
The qualifying list: controls for central heating and hot water systems; draught stripping; insulation; solar panels; wind and water turbines; ground source heat pumps; air source heat pumps; micro combined heat and power units; and wood-fuelled boilers. Added on 1 February 2024: water source heat pumps; batteries for storing electricity; smart diverters; and groundworks for ground or water source heat pump pipework. From the same date the relief also covers buildings used solely for a relevant charitable purpose.
Two conditions to be exact about. The relief applies only where the materials are installed — a supply-only sale is standard rated. And zero-rated supplies are outside the reverse charge, so on qualifying work the reverse charge question does not arise.
The deduction is charged on the payment less materials you directly incurred, consumable stores, fuel other than fuel for travelling, plant hire, the cost of manufacture or prefabrication, and the VAT you charged. Travel and subsistence stay in. And where the contractor buys the materials and recharges them, you have not directly incurred them, so no reduction is due at all.
If the deduction is costing you cash, gross payment status removes it. The turnover test is £30,000 of relevant payments net of VAT and materials for a sole trader. The compliance test, which since 6 April 2024 includes VAT, is the part that needs preparing for.
If you are paid under CIS, the deductions taken during the year are set against your tax bill and any excess is repaid. The CIS refund estimator gives a rough figure, how much is a CIS tax refund covers what decides it, and what you can claim lists the costs that count. Earlier years can still be claimed within the time limits, and a limited company recovers its deductions through the payroll instead. Keep every payment and deduction statement, because they are the evidence for the claim.
If you are VAT registered, the domestic reverse charge decides whether you charge VAT to a main contractor, and the reverse charge checker works through a single invoice. It also changes whether the Flat Rate Scheme is worth keeping.
Our fees are a fixed monthly amount agreed before we start, with payroll and CIS returns priced separately. For the books, FreeAgent is included with an eligible Mettle business account: see bookkeeping software for trades.
For money to buy a van or plant, or to cover the wait while a contractor pays, Buzz Financial Services runs a funding search for construction firms across a panel of lenders.
Not by itself. A conventional gas boiler is not on the qualifying list — wood-fuelled boilers and heat pumps are, as are the controls for central heating and hot water systems. Replacing a boiler in an existing occupied dwelling is repair or alteration and is standard rated at 20%. Fitting qualifying controls as part of the same job is a different supply with a different rate, which is worth showing separately on the invoice. Wood-fuelled boilers, air and ground source heat pumps and water source heat pumps are all on the qualifying list, so the fuel the appliance burns can decide the rate.
The rate follows the tax point. Work installed on or after 1 April 2027 attracts 5%, whatever date you quoted. If you are quoting now for installation after that date, the VAT position is different from the identical job installed before it — and for a domestic customer who cannot recover VAT, that is a real change in what they pay. Putting the rate, the basis for it, and what happens if the tax point falls on or after 1 April 2027 into the written quote is the only thing that stops the five points landing on your margin.
Where the supply is standard or reduced rated, is a construction operation reported within CIS, and both you and the customer are VAT and CIS registered with no end-user notification — yes. Where the supply is zero-rated, no: zero-rated supplies are outside the reverse charge altogether. So on the same site, qualifying energy-saving work and standard-rated repair work can carry different answers. So a heating engineer's invoice needs to show the two elements as separate lines.
Probably. The question has three separate answers, one each for benefit in kind, VAT and capital allowances. For benefit in kind there is a flat van benefit charge of £4,170 for 2026/27, and no charge at all where private use is restricted to business travel plus insignificant private use — which includes ordinary commuting. For VAT, input tax is recoverable on a commercial vehicle. For capital allowances a goods vehicle gets the Annual Investment Allowance. A double-cab pick-up is, on HMRC's primary suitability test, usually a car for the first and third of those.
We act for trade businesses everywhere in the UK and work with you remotely, so your postcode does not decide whether we can help. Your CIS and VAT position does not change when you cross a border either — but the building safety rules and the levy do, which is what the area pages cover.
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