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0% VAT until 2027 on energy efficient home improvements

Are you a plumber or gas engineer that carries out ‘green energy’ upgrade work in people’s homes? You have the perfect opportunity to lean into the government's 0% VAT initiative on energy-saving materials.

Have you heard – VAT on solar panels, heat pumps, solar batteries and other green home improvements has been reduced to 0%.

Here’s everything you need to know as a homeowner and tradesperson.

What is the new government energy saving scheme?

The UK government has released its Spring Statement 2022, which has a big focus on helping to protect households from the ever-increasing energy bills.

Chancellor Rishi Sunak announced that the government is cutting VAT from five per cent to zero when installing energy-efficient systems. These systems include solar panels, heat pumps and insulation.

According to Mr Sunak, “A family having a solar panel installed will see tax savings worth over £1,000 and savings on their energy bill of over £300 per year.”

newly installed solar panels

It’s good news for homeowners and tradespeople

Homes will benefit from the 0% VAT on energy-efficient measures for the next five years; from April 2022 and will last until 2027.

This latest initiative will give access to energy-saving upgrades that were previously too expensive.

Contractors will benefit from an increase in demand for installations under the new scheme.

How does it affect controls for central heating and hot water systems?

A smart thermostat being operated

Under the new scheme, controls for central heating and hot water systems will be subject to the 0% VAT rate. The controls included in the scheme are:

  • Electronic and manual timers
  • Thermostats
  • Electronic and mechanical valves
  • Thermostatic radiator valves

The reduced rate of VAT is only applied to installed products and not to the supply of energy-saving goods. It is also only applicable to the installation of new controls and cannot be applied to the cost of a new boiler installation.

Other government grants for new boiler installation are available. Have a read of our blog to find out more about energy grants available in 2022.

When will the scheme start and end?

The scheme started on the 1st April 2022. It will run until the 31st March 2027. During this time, the previous social conditions test and 60% test will not need to be applied.

Visit the government website for more detailed information about how the scheme will work.

What other energy-saving products are part of the scheme?

cavity wall insulation installation

Alongside controls for central heating and hot water systems, numerous other energy-saving products are part of the scheme. These include:

By reducing the rate of VAT on these energy-saving products, the government will help homeowners to save money and help the UK to reach the net zero carbon emissions target by 2050.

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Who is eligible for the scheme?

Almost all homeowners in the UK will be eligible for the scheme.

The main criteria that must be met relates to the type of dwelling where the installation will take place.

Eligible dwellings include:

  • Residential accommodation (house, bungalows, flats, multi-occupancy properties)
  • Children’s homes
  • Care homes
  • Hospices
  • Armed forces residential accommodation
  • Monasteries, nunneries, and other religious dwellings
  • Student residential accommodation
  • Self-catering holiday accommodation
  • Static residential caravans
  • Houseboats that are immobile and used as permanent accommodation

The 0% VAT rate does not apply to installations in prisons, hospitals, hotels, inns, or similar establishments.

How can new heating controls help homeowners save money?

As a gas engineer or central heating specialist, you’ll want to reassure your customers that new heating controls are a good way to save energy and reduce heating bills.

Electronic timers allow homeowners to program when they want their heating to come on and switch off. This enables homeowners to pre-set their heating system to come on in the morning or evening when needed and go off at night or when they are out at work.

When setting an electronic timer, it’s a good idea your home’s warm up and cool down time. This is usually in the region of 30 minutes. Setting your electronic timers to come on half an hour before you need the property warming and go off half an hour before you want it to start cooling down is a great way to save energy and reduce costs.

Thermostats help to regulate the temperature inside a building. They can be pre-set to a certain temperature and will turn on when a room drops below the set temperature.

According to The Energy Saving Trust, the ideal inside temperature is between 18 and 21 degrees Celsius. Obviously, this is somewhat subjective but if you aim for an ambient temperature between these two numbers, you can significantly reduce home heating bills.

Thermostatic radiator valves regulate the flow of hot water through the radiator. They do not directly control the boiler. Instead, a sensor detects the temperature outside the radiator. If the air in the room is warmer than the setting on the valve, the valve will close slightly, reducing the flow of hot water into the radiator.

Electronic and mechanical valves can both be pre-set to react to different temperatures. They usually work on a scale of zero to six, where zero is off and six is fully open. The lower the setting, the less energy will be used.

Have a read of our expert advice to find out more ways to improve the energy efficiency of a home.

People want your help

Plumbers, electricians and heating engineers are needed for their green home improvements

Join us


When should a heating timer be set for?

To be most energy-efficient and cost-effective, a heating timer should be set for the heating to come on half an hour before it is needed and to go off half an hour before the heating is no longer required.

How do heating controls work?

Heating controls work through sensors that detect the temperature around a home. They can be pre-set to the homeowner’s desired settings and will automatically regulate the inside temperature of a property.

What are Smart heating controls?

Smart heating controls allow a heating system to be controlled remotely. They can be accessed from any location via a Smart Phone, tablet, laptop, or desktop PC.

What is the best way to improve boiler efficiency?

Installing new heating controls is a great way to improve boiler efficiency. They can help you to regulate temperature and not use any more energy than required.

What is the VAT rate on boiler replacement?

Boiler replacement installations are subject to the existing reduced rate of 5% VAT.

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