New boiler installation VAT campaign gathers pace

Support is growing for the industry campaign seeking to persuade the government to cut the rate of VAT charged on high-efficiency boiler installations.

Boilers are subject to the full 20 per cent rate but other energy-saving equipment, such as controls, insulation, combined heat and power systems, biomass boilers, heat pumps and solar panels attract a 5 per cent rate.

The reduced rate applies to energy-saving installations in all residential properties and commercial buildings used by charities. Installations of these systems in new properties are zero VAT rated.

Leading figures are calling for this to be extended to boilers and passive flue heat recovery systems.

Last year’s boiler scrappage scheme saw sales of domestic boilers rise by 5.3 per cent in the final quarter of last year, according to the Heating and Hotwater Industry Council. However, the market has fallen back again since the start of 2011.

“The government could surpass the impressive results achieved by the scrappage scheme quickly, cheaply and with minimal administration costs if it just cut the rate of VAT on high-efficiency boilers,” said Baxi marketing director Sarah Brook (pictured).

Ms Brook said a temporary cut until the Green Deal scheme comes into effect in October 2012 would help the industry bridge a potentially difficult funding gap.

Peter Thom, chair of the Heating Strategy Group of the Energy Efficiency Partnership for Homes, has petitioned Chancellor George Osborne but was still awaiting a reply as this issue went to press.

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