VAT cut to zero on energy-saving materials
In yesterday’s Spring Statement, the Chancellor confirmed VAT on energy-saving materials, which includes heat pumps, will be cut to zero for the next five years.
This is excellent news for anyone considering upgrading their oil or gas heating system to a more energy efficient and environmentally friendly heat pump. The changes could offer homeowners significant savings on their heating project.
Currently, some energy-saving materials qualify for 5% VAT while others remain at 20% and the 5% VAT reduced rate is only available based on a range of criteria. The changes announced will see VAT abolished on items such as heat pumps, solar panels and insulation, from 1st April 2022 and run until 2027.
Examples of potential savings for homeowners which could be achieved:
Air source project – Based on a medium sized (9kW T Cap) air source heat pump
- Potential saving for those currently paying standard VAT rates (5-20%) = £1700.00
- Saving for those currently eligible for reduced rate VAT (5%) = £560.00
Ground source project – Based on a medium sized (14kW Vmi 14) ground source heat pump
- Potential saving for those currently paying standard VAT rates (5-20%) = £4790.00
- Saving for those currently eligible for reduced rate VAT (5%) = 1445.00
We welcome this announcement as further support to enable homeowners to make their homes more energy efficient and save money on their bills at a time when we all need to be cutting our carbon emissions. To talk to us about your heat pump project, please get in touch.
24th March 2022