When working in customers’ homes I’ve come across this many times, either the insulation is installed directly over the top of the down lights or the insulation is pulled right back around them.
So should we putting insulation over the top of the down lights? The answer is no, even most led down lights that produce much less heat than the older style halogen types, when covered in insulation the heat will still build up presenting a fire risk. But at the same time to comply with Part L of the building regulations you shouldn’t cut the thermal insulation around the fittings either, as the design of the fittings makes them act like chimneys, drawing out the warm air from the room below into the cold loft space above significantly reducing the effectiveness of your insulation.
There is a solution though, and that’s fitting loft caps or fire hoods above the down lights, this not only allows you to lay the insulation directly over the down lights but also provides fire protection for non fire rated down lights. The insulation should never be tightly packed around the downlights and their loft caps, a large air gap should always be left to allow air flow and prevent heat build up.