Government Announces 0% VAT on Domestic Heat Pump & Air Conditioning Installations

With energy prices continuing to go through the roof, we are all looking for ways to save money on our consumption when we heat or cool our homes. Many are also looking to use less energy to be greener and do their bit to save the planet. That is why heat pumps and air conditioning units have become so popular lately, and the Government’s decision to make VAT on the installation of these units is proving to be great news both for the consumer and the environment, as they are now a much more accessible option. What does this mean? It has been announced that until 31st March 2027 there will be a zero rate of VAT applied to the installation of certain energy saving materials in residential accommodation throughout Great Britain. This is the case whether the installation is grant funded or privately paid for and includes the price of the goods themselves. After 2027, it is proposed that the rate will revert to 5%. In Northern Ireland, the qualification can be slightly different, so it is important to check this. The reduced rate of VAT applies to energy saving materials which include ground source heat pumps and air source heat pumps to name just a few of the items on the approved list. As most air conditioning units are air source heat pumps, these have also been included. What does this include? The Government have specified that the cost of all the goods in the installation should be considered. That means that when an air source heat pump is installed, new larger radiators and pipes will need to be fitted as well since the pump operates at a lower temperature than a traditional gas boiler. It is therefore reasonable to consider that this is a single job for a single price, and these are considered ancillary to the installation of the heat pump. The recent heatwave has left many people wondering how they can cool their homes to keep them safe and comfortable during ever increasing temperatures. With climate changing meaning that our summers are set to only get hotter, the inclusion of air conditioning units in many buildings and residential accommodation is now becoming more popular. It is therefore good to see that the installation of many of these units will also be covered by the Government’s reduced VAT rate. Making improvements to homes which save energy can be a costly business at times and this has proved to be a barrier for many who have wanted to do it. This move by the Government will mean that a far larger number of homes can now make the move to add an air source heat pump and feel the benefit of lower bills and a reduced carbon footprint. This is something that applies to the retrofitting of units, as well as including them in new dwellings, to ensure as many homes as possible can benefit from this.

For more information on Government Announces 0% VAT on Domestic Heat Pump & Air Conditioning Installations talk to Chill Air Conditioning Ltd