From 1 May 2023 the temporary zero rate of VAT on qualifying energy-saving materials, including air source heat pumps, applies UK wide, extending the relief to Northern Ireland1. HMRC's published table of rates and commencement dates records the change as "1 May 2023 to 31 March 2027: zero rated UK wide (extended to Northern Ireland) (eligibility conditions removed permanently NI)"1. The same entry states that eligibility conditions were removed permanently in Northern Ireland1.
The zero rate had applied in Great Britain, meaning England, Scotland and Wales, from 1 April 2022, with eligibility conditions removed permanently there1. HMRC's table defines "GB" as England, Scotland and Wales and "UK" as also including Northern Ireland1. Before the UK-wide zero rate, air source heat pumps had been reduced rated from 7 April 2005, and from 1 October 2019 reduced rated subject to eligibility conditions described as social policy conditions and a 60% test1.
The 1 May 2023 change covers a list of energy-saving materials, not air source heat pumps alone. HMRC's table shows the same UK-wide zero rate from that date for controls for central heating and hot water systems, draught stripping, ground source heat pumps, insulation, micro combined heat and power units, solar panels, water turbines, wind turbines and wood-fuelled boilers1. Electrical storage batteries, smart diverters and water source heat pumps are listed separately as zero rated UK wide from 1 February 2024 to 31 March 20271.
The relief is temporary. HMRC states that "zero rated" refers to the temporary zero rate applying until 31 March 2027, after which the reduced rate applies1. The table shows a return to reduced rated from 1 April 2027 for air source heat pumps and the other materials listed1. Separately, relief for charitable buildings, withdrawn on 1 August 2013, was reinstated from 1 February 2024, so installations qualify when installed in both residential accommodation and charitable buildings1.
"1 May 2023 to 31 March 2027: zero rated UK wide (extended to Northern Ireland) (eligibility conditions removed permanently NI)"
| Energy-saving material | Rate and period |
|---|---|
| Air source heat pumps | Zero rated UK wide, 1 May 2023 to 31 March 2027; reduced rated from 1 April 2027 |
| Ground source heat pumps | Zero rated UK wide, 1 May 2023 to 31 March 2027; reduced rated from 1 April 2027 |
| Solar panels | Zero rated UK wide, 1 May 2023 to 31 March 2027; reduced rated from 1 April 2027 |
| Insulation | Zero rated UK wide, 1 May 2023 to 31 March 2027; reduced rated from 1 April 2027 |
| Electrical storage batteries | Zero rated UK wide, 1 February 2024 to 31 March 2027; reduced rated from 1 April 2027 |
Why it matters for households
VAT is charged on the supply and installation of a heat pump, so the rate that applies changes the total a household pays. For a Northern Ireland household, the 1 May 2023 change removed the eligibility conditions that had applied to the reduced rate and brought the treatment of an air source heat pump installation into line with Great Britain1. For households elsewhere in the UK, the position was already zero rated from 1 April 20221.
The relief is time limited. Because the zero rate ends on 31 March 2027 and the reduced rate applies from 1 April 2027, the VAT treatment of an installation depends on when it is supplied1. The rate also depends on the material: batteries, smart diverters and water source heat pumps have a later start date of 1 February 20241. Households weighing up a heat pump alongside other measures such as insulation or battery storage are looking at the same end date for the zero rate.
What happens next
The zero rate runs to 31 March 2027, after which the reduced rate applies from 1 April 20271. No further change to these dates has been reported.