The Heat Pump Association (HPA) has long been calling for financial incentives to maintain support for low carbon heating and drive uptake. This was a key recommendation within their Roadmap for Heat Pumps paper, as a result HPA is pleased to see the government commit to abolishing the 5% VAT on energy efficiency measures as part of the spring statement.
By aiding the electrification of heat, this VAT cut will help to improve energy security and resilience here in the UK, whilst unlocking significant energy savings in homes at a time when costs are spiralling. The decision will complement other financial incentives such as the Boiler Upgrade Scheme, which will offer grants between £5,000 – £6,000 from 23rd May. However, more must be done to boost the heat pump market, including the removal of environmental levies and further upfront support such as low-interest loans.
The incentive to install a heat pump
Finally, we must remember that whilst the green tax cut will provide many households with the incentive to install a heat pump, they will not be the answer for low-income households who will still require full grants.
Phil Hurley, chair of the Heat Pump Association said: “The spring statement comes with great news for the heat pump industry and households today. The HPA has been working hard behind the scenes calling for financial incentives to tackle the barriers to heat pump uptake, and the decision to cut VAT from 5% to zero on energy-saving measures is an important step forward.
“Whilst this decision alone will not be enough to enable all households to access technologies such as heat pumps, we are confident that it will play a role in helping to accelerate the switch to low carbon heat. But we must remember that more steps still need to be taken to support the rollout of heat pumps, including the removal of illogical environmental levies on electricity.”