VAT and savings · 7 min read
Zero-Rated VAT on Air Source Heat Pumps, Explained
The zero rate covers more than the box on the wall — but not everything. Here is where the boundary sits and what to look for on a quote.
Published 2026-07-20 · Updated 2026-07-20 · WDI Group (Surrey) Ltd
What the zero rate covers
Where an installation qualifies, the zero rate applies to the heat pump equipment and to the labour of installing it. It also covers ancillary supplies that are a necessary part of that installation — the brackets, refrigerant pipework, condensate route, controls and the making good that goes with it.
That is why the relief is worth having: it is not 20% off a small parts bill, it is 20% off the installed project.
What it does not cover
Work that is not part of the heat pump installation stays at its normal rate. A separate rewire, a new consumer unit specified for reasons beyond the installation, decorating carried out by a third party, or scaffolding hired directly by you are all outside the relief.
Equipment supplied on its own, without installation, is standard rated. So is any subsequent service visit.
- Supply-only equipment with no installation
- Servicing, maintenance and repairs after handover
- Unrelated electrical or building works
- Commercial premises of any kind
How it should appear on a quotation
A compliant quotation shows the net figure, the VAT rate applied, the VAT amount and the total. If a quote simply shows one number with no VAT line at all, ask for it in writing before you compare it with anyone else's.
Beware of comparing a zero-rated quote against a standard-rated quote without noticing. A 20% difference between two prices can be tax treatment rather than value.
The paperwork we keep
We record the property type, the equipment specification and the heating capability of the system on file, because the zero rate must be evidenced if HMRC ever asks. You get a copy of the invoice showing the treatment applied.
Doing this properly protects you as well as us: an installer who applies the relief carelessly can leave a customer facing a corrected invoice later.
Frequently asked questions
- Can you zero rate a system in my home office at the bottom of the garden?
- Usually yes, where the outbuilding is part of the residential curtilage and used as part of the dwelling. If you trade from it as a separate business premises, we will look at it more carefully.
- What about a rental property I own?
- Residential accommodation includes let dwellings. The relief follows the use of the building, not who owns it.