Zero Heroes:
Energy-saving heating products with 0% VAT

With VAT on the installation of energy-saving materials and heating equipment cut to zero until March 2027, find out how the scheme works and which of Vaillant’s low carbon products are eligible

Last year, the UK government temporarily reduced the rate of VAT on energy-saving heating products to 0% until 31 March 2027.

Announced in the Spring Statement 2022, the scheme came into effect on 1 April 2022 and originally covered England, Scotland and Wales. Now, it has been extended to include Northern Ireland from 1 May 2023.

It means that the cost of installing products like Vaillant’s aroTHERM plus heat pump in homes will become more affordable for your customers over the next few years.

It’s hoped that these measures will boost the uptake of low carbon heating technology and help meet the government’s target of installing 600,000 heat pumps a year by 2028, as set out in the Ten-point Plan for a Green Industrial Revolution and the Heat and Buildings Strategy.

Essentially, if you’re a contractor or subcontractor who installs energy-saving materials and heating equipment in residential properties, your customers can get 0% VAT on the installation cost – whether you supply the goods yourself or the homeowner purchases them elsewhere.

However, if you supply a product without installing it, this will attract the standard VAT rate of 20%. Installers have a duty to ensure that the correct rate of VAT is being charged to their customers.

The zero rate also extends to ancillary supplies – installing new goods or services that improve the efficiency of the principal supply.

Take air source heat pumps as an example. Because it operates at a lower temperature than a traditional gas boiler, a heat pump might also need larger radiators and pipework fitted alongside it. If all these goods are installed as part of a single job, the new radiators and pipework would also benefit from the relief.

The social policy conditions and the 60% test for all installations of qualifying energy-saving materials have been permanently removed.

But it’s important to note that the zero VAT rate on these products is only temporary – so the rate of VAT will revert to 5% on 1 April 2027.

"The scheme means that the cost of installing products like Vaillant’s aroTHERM plus heat pump will become more affordable for homeowners"

The scheme only applies to residential dwellings, such as houses and blocks of flats, as well as premises like care homes, student accommodation and self-catering holiday accommodation.

It doesn’t cover installations in hotels, inns, hospitals or similar establishments, so the normal-rated VAT will apply in these cases.

Until 31 March 2027, the VAT on the domestic installation of Vaillant’s air source heat pumps and ground source heat pumps is slashed to zero.

The aroTHERM plus is our game-changing air source heat pump. With its high efficiency, Quiet Mark-accredited operation and a low Global Warming Potential of just 3, it’s increasingly popular among homeowners who are making the transition to low carbon heating.

Also qualifying for zero VAT are controls for central heating and hot water systems. These include Vaillant’s high-tech sensoCOMFORT control, with its sleek interface, simple operation and eBUS connectivity, as well as the ambiSENSE smart TRV, which allows the homeowner to individually control the temperature of each room from their mobile device.