When you are thinking of installing an air conditioning system or air source heat pump, you may be concerned about paying the additional VAT on top of the service price. However, as announced by Rishi Sunak at his last budget, from April 1, 2022, 0% VAT can be applied to all domestic installations, making the process cheaper and easier to manage.
Why has VAT been reduced?
Previously, VAT stood at 5%, having been reduced from 20% a few years ago. Chancellor Rishi Sunak announced that this will now be reduced to 0% on all domestic installations from April 1, 2022. This is to encourage more homeowners to invest in air source heat pumps or air conditioning units. It is part of the government’s drive to reduce carbon emissions and reduce cost issues that have arisen because of the energy crisis.
Air conditioning wasn’t explicitly mentioned by Sunak during the budget, but they can be grouped under heat pumps providing the system has dual use by supplying both hot and cold air.
Modern day gasses such as R22 and R410a produce more heating power due to their higher pressure, which means new air conditioning systems are extremely efficient at providing heat.
It should also be noted that the new 0% VAT rate can only be applied to installations and not to the purchase of the equipment only. Portable air conditioning units and not included and the zero rate will remain in place until March 2027.
Changes to energy saving material rules
Since 2019, there has been a requirement for domestic installations to pass a “60% test” to achieve the reduced 5% VAT rate.
This was implemented by HMRC and could be applied where materials exceeded 60% of the total cost charged to the homeowner. Sunak announced in the budget that this is no longer a requirement for home installations, making air conditioning units more accessible to people right across the country.
How to secure your 0% VAT on a home installation
At AAC we’re experts at installing air conditioning units and are available right now to discuss your options to see which system suits your needs. We operate across London and the home counties, so to find out more and book in a free survey and quote, email
info@aac.uk.net or call
01707 32 55 66.
