As part of its commitment to reducing the emission of gases responsible for global warming, the Government has awarded a reduced rate of VAT to the supply and installation of heat-pump air-conditioning systems in residential properties.
The maintenance and repair of such systems also qualify for the low VAT rate.
They state that “reducing the rate of VAT will encourage the increased use of such energy efficient products and will have a positive effect in reducing carbon emissions”.
With the standard rate of VAT now at 20%, the reduced VAT rate of 5% represents a significant saving to the homeowner.
The supply and installation of a heat-pump, wall-mounted system is priced at £1250.00 ex Vat. With VAT applied at the standard rate of 20%, the total cost to the customer would be £1500.00.
But with VAT applied at the low rate of 5%, the total cost to the customer reduces to £1312.50, in turn providing a saving of £187.50!
When you consider that the electrical consumption of the example heat-pump system is less than a quarter of that consumed by any other form of electric heating, the savings (both short and long-term) are obvious, in addition to which a facility to cool your home is gained.