Reduced rate of 5% VAT
Reduced rate of 5% VAT on Air Source Heat Pumps for residential and charity buildings refurbishments.
Did You Know?
Households create a quarter of all emissions, so as an incentive to purchase greener alternatives there is a reduced rate VAT on energy saving materials and this includes Air Source Heat Pumps (both heating and cooling). A dedicated air source heat pump is estimated to save in excess of two tonnes of carbon emissions per year.
How the reduced rate VAT works
Equipment and installation costs for a qualifying project must be on the same invoice to benefit from the reduced rate of VAT. Therefore the contractor will purchase an Air Source Heat Pump at the standard 17.5%, but will sell to the qualifying customer at the reduced rate of 5% VAT.
The ‘input tax’ (VAT paid by the supplier when the purchase is made) will be more than the ‘output tax’ (VAT you charged) and the difference between the two can be reclaimed from Customs and Excise via the normal quartlerly VAT return.
What is covered under residential?
- Houses, flats or other dwellings
- Children’s home
- Hospices
- Homes providing care for the elderly, disabled or people who suffer drug or alcohol dependency or mental disorder
- Institutions that are the sole residence for at least 90% of their occupants
- Monasteries, nunneries and similar religious accommodation
- School and universaity residential accomodation
- Self catering holiday accomodation
- Permanently sited caravans (7m plus long or 2.3m wide)
- Permanent house boats (subject to council tax)
For further information on reduced rate VAT and Grants please click here.