VAT and savings · 8 min read
Is Air Conditioning VAT Free in Domestic Properties?
Modern air conditioning is a heat pump. Where it is installed in a qualifying residential property in Great Britain, the installation can currently be zero rated for VAT.
Published 2026-07-20 · Updated 2026-07-20 · WDI Group (Surrey) Ltd
The relief in plain English
HMRC applies a temporary zero rate of VAT to the installation of certain energy saving materials in residential accommodation in Great Britain. Air source heat pumps are on that list, and a modern air conditioning system is an air source heat pump: it moves heat rather than burning fuel, and reversible units deliver heating as well as cooling.
Where the relief applies, the whole supply — equipment and labour installed together by the same contractor — is zero rated. That is a genuine saving of 20% against a standard rated installation, not a discount we are choosing to give.
Who qualifies
The relief is aimed at residential accommodation: houses, flats, maisonettes and similar dwellings, including a garden room or annexe used as part of the home. The installation has to be supplied and fitted by the same contractor; buying a unit online and paying someone to fit it separately does not attract the relief on the equipment.
Commercial premises — shops, offices, salons, server rooms, restaurants — are standard rated at 20%. Mixed-use buildings are assessed on the part of the building being served.
- Houses, flats and maisonettes used as private dwellings
- Supply and installation together, by the same contractor
- Heating-capable (reversible) air source heat pump equipment
- Great Britain — different rules apply in Northern Ireland
Cooling-only systems are treated differently
The relief exists because heat pumps are an energy saving heating technology. A cooling-only unit is not a heating appliance, and does not sit within the relief. In practice this rarely matters domestically, because almost every system we install in a home is reversible and delivers heating in winter.
If you have been quoted for a cooling-only system in a home, that is worth questioning on both comfort and VAT grounds.
How we handle VAT on your quotation
Our written quotations state the VAT treatment explicitly, so you are never guessing what the final figure is. Where we apply the zero rate, the quotation says so and records why the installation qualifies.
We are part of WDI Group (Surrey) Ltd, VAT registration 495855036, and we account for every installation properly. If your project does not qualify, we will tell you before you commit rather than after.
It is a time-limited relief
The zero rate is a temporary measure with a published end date, after which the reduced rate is scheduled to return. Policy can change at any Budget, so the treatment that applies is the one in force on the date of supply.
If VAT treatment materially affects your decision, it is worth getting the survey booked rather than waiting a year and hoping.
Frequently asked questions
- Does 0% VAT apply to servicing and repairs?
- No. The relief covers the installation of qualifying energy saving materials. Ongoing servicing, maintenance and repair work is standard rated.
- Do I have to apply for the relief?
- No. There is no form and no claim. Where the installation qualifies, we invoice it at 0% VAT and keep the evidence on file.
- Is this the same as a government grant?
- No. Grant schemes such as the Boiler Upgrade Scheme cover different technologies. The VAT zero rate is simply a change to the rate of tax charged on the work.