0% VAT on Air Conditioning Installations

In the Spring of 2022, the Government announced that from 1st April there would be 0% VAT on the installation of Air Conditioning systems and Heat Pumps.

The implementation of this VAT relief scheme aimed to incentivise homeowners to adopt air conditioning units and make use of energy-saving materials (ESMs). A notable outcome of Brexit is that the UK is no longer constrained by Brussels’ regulations concerning domestic VAT policies. Leveraging this newfound autonomy, the UK exercised its prerogative to overturn the European mandate that limited VAT on energy-saving materials to 5%. Subsequently, the budget introduced a favourable adjustment, reducing the VAT rate from 5% to 0% for a span of five years. Consequently, households investing in ESM installations will benefit from reduced costs, as they will no longer incur the VAT typically levied by installers, a practice also known as Seasonal Control.

This reduction also supplants the earlier discounted rate of 5%, eliminating the need for previous conditions such as ‘social conditions’ and the ‘60% test’. As a result, more homeowners will be able to install air conditioning units and energy-saving solutions, aligning with the Government’s objective to enhance energy efficiency and mitigate carbon emissions in households nationwide. For further details, please visit the HMRC website.

Zero Rate 0% VAT on Air Conditioning Installations

If you’re considering installing new home air conditioning, there’s never been a more opportune moment. With energy prices on the rise and the government’s commitment to achieving zero emissions by 2050, there’s a growing market demand for energy-saving solutions. Low carbon heat pumps emerge as a sustainable and cost-effective heating option, ensuring comfort during winter while offering respite from scorching summer temperatures.

Given their low operational expenses and superior efficiency, investing in an AC system presents an exceptional means to regulate your home’s temperature, whether cooling it down during summer or warming it up in winter.

What are ESMs (Energy Saving Materials)?

ESM stands for Energy Saving Materials, these are products/systems that use little gas and electricity. They are intended to lower the impact that we have on the environment which 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
  • Solar panels
  • Insulation
  • Draught stripping
  • Air source heat pumps
  • Ground source heat pumps

The government’s 0% tax rate covers the installation of the following:

  • Controls for central heating and hot water systems
  • Insulation
  • Draught stripping
  • Solar panels
  • Micro combined heat and power units
  • Wood fuelled boilers
  • Wind turbines
  • Ground source heat pumps
  • Air source heat pumps
  • Water turbines

Does this Benefit Apply to the Air Source Heat Pump Grant?

Additionally, the government offers a grant for Air Source Heat Pumps, which is accessible to homeowners in England and Wales. This grant covers up to £5000 for the installation of air source heat pumps. It forms part of a larger £3.9 billion funding initiative, with the government committing £450 million over the next three years. This funding will facilitate the installation of air source heat pumps, aiding the nation’s progress towards achieving the net-zero target for 2050.

This 0% VAT scheme will complement the £5000 grant available for air source heat pump installations. Both initiatives serve as excellent introductions to enhancing home energy efficiency.

Are Air Conditioning Systems Considered Heat Pumps?

The majority of air conditioning systems are categorised as heat pumps because they offer both heating and cooling capabilities. Known as air-to-air heat pumps, modern systems utilising gases like R410a and R22 operate at higher pressures and deliver increased heating efficiency. Technological advancements have significantly enhanced the efficiency of air conditioning heating.

Rules Regarding the Installation of Energy-Saving Materials

Qualifying installation criteria have been streamlined, with systems primarily designed for cooling previously ineligible for the reduced rate. However, any systems capable of providing heating alongside cooling for residential properties now qualify for the scheme.

Prior to April 2022, the ‘60% test’, established by HMRC, was in place but has since been eliminated. This test aimed to restrict the reduced VAT rate if materials accounted for over 60% of the total customer charge.

Resellers of air conditioning units that provide the unit separately from installation services will need to apply a 20% VAT rate. Portable systems are excluded from these schemes, which are scheduled to run from April 2022 to March 2027.

Why Introduce 0% VAT for Air Conditioning Installation?

The government is committed to significantly reducing domestic carbon emissions, part of a broader initiative to promote the use of Energy-Saving Materials (ESMs) such as heat pumps and air conditioners.

Do Air Conditioning Installation Companies Need to Levy VAT on Domestic Installations?

With the recent VAT relief announcement, the answer is no. Installation companies are not required to charge VAT to residential and domestic customers, provided certain criteria are met.

Previously, only select energy-saving materials qualified for a reduced VAT rate of 5%. However, starting from April 2022, zero-rate VAT applies to the installation of energy-saving materials across the UK. This measure is set to remain in effect until March 2027, with the potential for expanding ESM coverage to include more technologies.

Further Insights into Air Conditioning Installations

When it comes to choosing from the various options available, we recommend reaching out to a specialist installation company like Split Aircon. We can offer tailored advice on the most suitable type and brand of air conditioner based on your unique requirements.

Air conditioning systems provide both heating and cooling functionalities and are highly efficient, helping you save on energy costs. This affordability has positioned them as one of the most economical solutions for maintaining optimal home temperatures.

At Split Aircon, we deliver a comprehensive range of air conditioning services featuring top brands and manufacturers. Rest assured, our team ensures the quality and reliability of the air conditioning systems we install.

From installations to repairs and maintenance, our fully qualified and experienced team at Split Aircon is ready to address all your air conditioning needs.

Air Conditioning Installations by Split Aircon

At Split Aircon, we prioritise delivering top-notch air conditioning services at competitive prices. Our highly trained installers are equipped to handle all types of domestic and commercial air conditioning units. For your domestic air conditioning needs, reach out to Split Aircon, and we’ll be delighted to assist you.

Advantages of Residential Air Conditioning

Opting for a residential air conditioning unit presents a multitude of benefits for both your home environment and personal well-being. Here are some of the advantages:

  1. Enhanced Comfort: Enjoy a consistently comfortable indoor environment regardless of external weather conditions.
  2. Health Benefits: Air conditioning helps to maintain optimal indoor air quality, reducing the risk of respiratory issues and allergies.
  3. Energy-Efficient Cooling: Modern air conditioning units are designed to provide effective cooling while consuming minimal energy, contributing to lower utility bills.
  4. Quiet Operation: Most contemporary units operate silently, ensuring a peaceful atmosphere within your home.
  5. Improved Air Quality: Air conditioning systems filter out pollutants and allergens, promoting cleaner and healthier air circulation.

These are just a few of the compelling benefits associated with investing in a residential air conditioning unit. If you’re considering installing one in your home or residential property, don’t hesitate to reach out to Split Aircon. We’re here to address any inquiries you may have and offer guidance on selecting the right unit for your specific needs.

Planning to Install an Air Conditioner for Your Home?

Trust Split Aircon for a seamless and long-lasting installation. Our team of experts specialises in designing, installing, and servicing air conditioning units tailored to your unique requirements.

For all your residential air conditioning needs, rely on Split Aircon. With years of experience in installing high-quality domestic air conditioning units, we provide products backed by full guarantees. Our mobile team is available year-round to service and maintain your units as required.

To learn more about our residential air conditioning units or to schedule an installation, contact Split Aircon today.

Why Choose Split Air Conditioning & Heating Services?

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