0% VAT On Air Conditioning Installations
In Spring 2022, the Chancellor of the Exchequer, Rishi Sunak, now Prime Minister, announced that from 1st April there would be 0% VAT on the installation of Air Conditioning and Heat Pumps.
This VAT relief scheme was introduced to help encourage homeowners to install air conditioning units and utilise these energy-saving materials (ESMs). This is one of the benefits to come from Brexit, the UK is not bound by Brussels when it comes to domestic VAT rules. The UK used its right to reverse the European decision of restricting 5% VAT on energy-saving materials. The new budget then provided a boost by reducing 5% to 0% VAT for a period of five years, meaning that households who are having ESMs installed will pay less and save on the VAT that installers usually need to charge, this can also be referred to as Seasonal Control.
This reduction also replaces the previously reduced rate of 5% as well as previous ‘social conditions’ and ‘60% test’ requirements are no longer required. This will permit more homeowners to install air conditioners and energy-saving solutions as part of the Government’s aim to improve energy efficiency and reduce carbon emissions in homes across the country. You can find more information here on the HMRC’s website.
Zero Rate 0% VAT on Air Conditioning Installations
So if you’re looking for new home air conditioning, there hasn’t been a better time to have it installed. With the current increase of rising energy prices and the government’s zero emissions goal for 2050, there will be a boost in the market for energy saving, low carbon heat pumps are a viable and cost-effective heating solution that is sustainable during the winter months and can also provide relief from the hot summer temperatures.
Due to low running costs and high efficiency, the purchase of an AC system is an excellent way to cool or heat your home.
What are Energy Saving Materials (ESMs)?
ESMs are an abbreviation of Energy Saving Materials, they are products/systems that use little gas and electricity. They aim to lower the impact that we have on our environment, this is why the government is offering incentives for installations of them. ESMs can be a range of items, but can be divided into the following groups:
Controls for central heating and hot water systems
Draught stripping
Insulation
Solar panels
Ground source heat pumps
Air source heat pumps
The government’s 0% tax rate covers the installation of the following:
Controls for central heating and hot water systems
Draught stripping
Insulation
Solar panels
Ground source heat pumps
Air source heat pumps
Micro combined heat and power units
Wood fuelled boilers
Wind turbines
Water turbines
Does this Benefit the Air Source Heat Pump Grant?
The government also has a grant for Air Source Heat Pumps, homeowners in England and Wales are eligible for this and it covers a grant of £5000 for the installation of air source heat pumps. This is part of a £3.9bn funding scheme that the Government will provide £450 million over the next three years, for £90,000, air source heat pumps will be installed to help contribute towards Britain’s net-zero target for 2050.
This 0% VAT scheme will complement the £5000 grant that is available for air source heat pump installations. Both of these schemes are a great introduction to making their homes more energy efficient.
Are Air Conditioning Systems Classed as Heat Pumps?
The majority of air conditioning systems are also referred to as heat pumps, this is because they provide both heating and cooling, this is known as air-to-air heat pumps. Modern-day technology means that air conditioning heating is now very efficient.
The Rules on the Installation of Energy-Saving Materials
The rules of qualifying installations have been simplified, systems that are used to cool weren’t eligible for the reduced rate. As long as systems can provide heating in addition to cooling a domestic property, they will be eligible for the scheme.
Before April 2022, there was a ‘60% test’ which has since been removed. This 60% test was created by HMRC and aims to limit the reduced VAT rate where materials have exceeded 60% of the total cost that has been charged to the customer.
Resellers of air conditioning units that provide the unit without the service will need to charge 20% VAT. Schemes don’t apply to portable systems and are set to run from April 2022 to March 2027.
Why Has 0% VAT for Air Conditioning Installation been Introduced?
The government has plans to drastically reduce domestic carbon emissions, this is all a part of a wider incentive to encourage the use of ESMs like heat pumps and air conditioners.
So do Air Conditioning Installation Companies need to charge VAT on Domestic Installations?
The new announcement for VAT relief means no, they don’t need to charge VAT to residential and domestic customers as long as the certain rules are followed.
Before this, only certain energy-saving materials qualified for a reduced VAT rate at 5%, however from April 2022, zero rate VAT will apply and cover the installation of energy-saving materials in the UK. This will last until March 2027 and another prospective benefit is that ESMs may be expanded to cover more technologies.
More About Air Conditioning Installations
There are a number of different options to choose from, we recommend that you contact a specialist installation company, like Mr Foxl, they will advise you on the type and brand of air conditioner that is best for you and your individual requirements.
Air conditioning systems can both heat and cool, they are also very efficient and can help you to save on energy bills, this has made them one of the cheapest solutions to keeping your home at the right heat.
We have been providing a comprehensive range of air conditioning services from the best brands and manufacturers, so you can trust the quality of the air conditioning system you are having installed by our team.
From installations to repairs and maintenance, the team at Mr Fox are fully qualified and experienced, they can be on hand to assist with all of your air conditioning requirements.
Air Conditioning Installations from Mr Fox Ltd.
At Mr Fox Ltd. we strive to provide the best possible air conditioning service at a highly competitive price. All of our air conditioning installers are highly trained and are capable of installing all types of both domestic and commercial air conditioning units. When it comes to needing domestic air conditioning, be sure to get in touch with Mr Fox Ltd. and we’ll be more than happy to help.
Benefits of Domestic Air Conditioning
Investing in a domestic air conditioning unit offers a range of great benefits both for your home and your own health. Some of the benefits of domestic air con units include:
More comfortable environment
Numerous health benefits
Energy-efficient cooling system
Silent operation (most modern units are virtually silent)
Improved air quality
These are just a few of the great benefits that investing in an air conditioning unit for your property can have. If you’re interested in having a domestic air conditioner installed at your home or residential property, then please don’t hesitate to get in touch with Mr Fox. We can answer any questions that you might have and we can also advise on which type of unit is needed for your property.
Looking to install an air conditioner for your home? Get a flawless and durable installation from Mr Fox Ltd. Our experts can design, install or service air conditioning units to suit your individual requirements.
When it comes to needing domestic air conditioning, look no further than Mr Fox. We have years of experience installing domestic air conditioning units and only install quality air con units. All our products come with a full guarantee. Our mobile team is available every day of the year to service and maintain your units as per your need.
For more information on our domestic air con units or to arrange domestic air conditioning installation, be sure to give Mr Fox a call.
