VAT & Grants

  1. Reduced Rate of VAT on energy-saving devices

    • Clarification for Residential Applications

      In the 2005 Budget the Government pledged to extend the reduced rate of VAT to the supply and installation of air-to-air heat pumps and micro-CHP in homes and certain residential and charity buildings.

      The Reduced-Rate 5% VAT applies to ANY air source (air-to-air, air-to-water) heat pump supplied and installed in a qualifying building, regardless of operating efficiency.

      Paragraph 7.28 states:

      “Households have an important role to play in helping the UK to meet its environmental targets, as they count for nearly 30% of energy consumption and around 25% of total UK (Carbon) emissions.

      To encourage investment in domestic energy efficiency, the Government has introduced a broad range of measures including the use of economic instruments such as reduced rate VAT rates for micro-renewable energy and energy saving materials.

      Building on progress made to date and recognising the environmental benefits, Budget 2005 announces a reduced rate for installation of micro combined heat and power (micro CHP) and also extends the reduced rates to air source heat pumps.”

      Space Air offers a comprehensive range of energy efficient heat pump systems for residential applications (air-to-air and air-to-water).

      What does the Reduced Rate of VAT mean to you?

      A VAT Registered person must charge VAT but can reclaim from Customs and Excise as much of the VAT on purchases and imports as relates to the Standard-Rate, Reduced-Rate and Zero-Rated supplies.

      If the "input tax"(i.e. VAT paid by the supplier when he made the purchase) is more than the "output tax" (i.e. the VAT he charges) — The difference can be reclaimed from Customs and Excise via the normal quarterly VAT return.

      Reduced Rate VAT for energy saving materials for homes and certain residential charity buildings including air source heat pumps has NO CONNECTION with "Energy Technologies List" or the ECA scheme which is directly linked to operating efficiency and business use.

      Reduced Rate of VAT — just 5%

      Currently applies to:

      • Domestic fuel or power
      • Installation of certain energy saving materials**
      • Grant funded installations of heating equipment
      • Certain renovation and alterations of dwellings
      • Certain Residential conversions
      • Children's car seats and cycle helmets
      • Women's sanitary products

      **This category now includes heat pumps.

      Other Reduced-Rate energy saving materials

      • Central heating and hot water system controls
      • Draught stripping
      • Insulation
      • Solar panels
      • Wind turbines
      • Water turbines
      • Heat pumps (air-to-air, air-to-water, ground source)

      Note: If you supply reduced rate energy saving materials without installing them your supply is at standard rate 20% VAT — even if it is grant funded.

      For further information please refer to www.hmrc.gov.uk search under ‘reduced rate VAT’

  2. Renewable Heat Premium Payments

    • The Government has launched a new scheme called the Renewable Heat Premium Payment (RHPP), to financially assist with investments in renewable heat technologies, including heat pumps (air source, ground source or water source).

      Under the RHPP, residents (property owners or tenants) can apply to receive a payment of  £850 to offset the capital cost, however, there is an eligibility criteria. You will also need to ensure that the heat pump being considered is MCS accredited and installed by an MCS registered company, as this provides consumer assurance that both have gone through rigorous, independent assessment processes. Space Air and the Daikin Altherma product are both MCS accredited.

      Some heat pumps, such as the ‘Complete’ Daikin Altherma from Space Air, can be combined with solar thermal energy and a further payment can be applied for through the RHPP scheme, thus saving even more on your initial investment and energy bills, and protecting the environment.

      Visit www.est.org.uk for further information or apply online at https://secure.est.org.uk/scheme/view/rhpp.

      To arrange a visit to Space Air’s fully operational air source heat pump showroom based in Guildford Surrey Call: 01483 252 252.