Rise in VAT from 5% to 20%?

Ken2000

I had recently received a quote for the installation of an air source heat pump and plumping/radiators, but I received an email from the installers to say that they're quote was based on VAT at 5% and that now it's up to 20%. This would mean having to pay a good £2.5k more, which is hugely disappointing and has thrown into question whether it's worth doing. 

Does this change in VAT seem correct and had I had to work done sooner, would I have avoided this huge hike in price? 

matelodave

https://www.gov.uk/tax-on-shopping/energy-saving-products
You need to have a shufti at this together with the associated notices.including this one - https://www.gov.uk/guidance/vat-on-energy-saving-materials-and-heating-equipment-notice-7086#renewable-source-heating-systems

 It appears that the reduced 5% VAT on some stuff was rescinded in October 2019 so you might find that you need to examine the quote to see if it can be split into higher and lower VAT portions by getting separate quotes for the heatpump, the controls, the rads and pipework and even the labour portion of the installation. You may find that you qualify due to age or if you get certain benefits.

When we had our system put in ten years ago we got thw whole lot at 5% but a year or so later the VAT rules changed and only controls and the heatpump became subject to the 5% VAT  rate and the rest of the heating system were rated at 20%.

It's a bit of a minefield and unreasonably complicated so you need to see what you can do to to see how the rules can be utilised to try and mitigate the costs bearing in mind how it might affect the RHI registrations as well.

TBH you sometimes have to wonder if the government really do want us to become energy efficient when they take away some of the incentives or make it so complex,