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Introduction of 0% VAT for the Installation of Domestic Air Conditioning & Air Source Heat Pumps in 2022

Included in the 2022 Spring Statement, Rishi Sunak, Chancellor of the Exchequer, announced that from April 1st, 2022, 0% VAT would be introduced to the installation of Air Conditioning units & Air Source Heat Pumps.

Why the introduction of the reduced VAT?

The introduction of this reduction in VAT replaces the previous reduced VAT rate scheme, which saw the rate drop from 20% to 5%. This reduction aims to encourage a higher number of homeowners to invest in the installation of either a home air conditioning unit or an air source heat pump. This is due to the government wanting to cut domestic contributions to carbon emissions and reduce the cost of the current energy crisis.

The Chancellor further added that details on tackling current heating costs would be included in the upcoming ‘Energy Security Plan’, which is due to be introduced to the public in April or May 2022. The plan will aim to lay out the process and financial commitments for helping to provide ‘affordable energy’ in the UK.

Read more about the introduction of 0% VAT for installing energy-saving materials and grant-funded heating equipment on the government website.

The inclusion of Air Conditioning Installation in the scheme. 

The Chancellor stated, “Homeowners who have solar panels, heat pumps and insulation installed will no longer pay 5 per cent VAT – they will pay zero”. Though the Chancellor didn’t include Air Conditioning units in his statement, Air Conditioning can be grouped under heat pumps due to the dual use that is utilised, allowing for both hot air and cold air to be introduced to a home thanks to Air Conditioning units.

With Air Conditioning being included in the 0% VAT, the time to install a Domestic Air Conditioning unit could not be better, and due to the scheme including units that have the options to introduce both cold and hot air into the environment that they are installed in, the savings that could be attributed to them in comparison to Air Source Heat Pumps, may make them one of the cheapest ways to keep your home at optimum temperature.

How does this benefit the Air Source Heat Pump Grant? 

The government recently introduced a grant for Air Source Heat Pumps in April, with homes in England and Wales being eligible for a grant of £5,000 for the installation of Air Source Heat Pumps. This was part of the £3.9bn funding package in which the government will provide £450 million over the next three years for 90,000 Air Source Heat Pumps to be installed to help with Britain’s net-zero target for 2050.

The introduction of 0% VAT which would complement the £5,000 grant for Air Source Heat Pump Installation, has been met with positive reviews, with the Heat Pump Association (HPA) saying it was pleased that the government was abolishing the current 5% VAT charge on energy-efficient measures such as Heat Pumps. The introduction of both schemes will be an incentive for many homes across the UK to install a heat pump.

Our Air Conditioning and Air Source Heat Pump Services

We offer a rapid and top-quality service across the South of England. Our headquarters are located in Swindon, and our engineers are based across the South, including Bath, Bristol, Gloucester, Oxford, and Reading. With our 24/7 support line, we are always here to help with any installation or maintenance as quickly as possible.

At Carlton Services, we offer a comprehensive range of air conditioning services and products. From air conditioning unit installation to maintenance and emergency repair, our expert aircon engineers are here to help you any time of the day or night. As well as being able to provide a range of air source heat pump services to domestic & commercial customers. From routine air source heat pump maintenance to new installations, our specialist engineers are experienced and qualified to help.