Wall-mounted air conditioning unit in a bright living room

0% VAT on air conditioning and heat pumps until 31 March 2027

Installing an air source heat pump in a home is zero-rated for VAT in Great Britain until 31 March 2027. HMRC's own guidance says most fixed air conditioning units are air source heat pumps, because they heat as well as cool. So a permanently fitted air conditioning system installed in your home by us can qualify for 0% VAT. From 1 April 2027 the rate goes back up to 5%.

Reviewed by Harry Lee, Director, HT Cooling Ltd (F-Gas registered company, certificate 2004080) · Last checked 22 October 2026

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What the rule actually says

The government charges 0% VAT on the installation of energy-saving materials in residential accommodation. Air source heat pumps are on the list. HMRC's guidance states that only air source heat pumps that are permanently fixed, and not portable or moveable, qualify, and that HMRC's understanding is that most air conditioning units are air source heat pumps. Where there is doubt, it depends on the facts of the particular product.

The zero rate runs until 31 March 2027. From 1 April 2027, installations of energy-saving materials revert to the reduced rate of 5% — not the full 20% that some advertising suggests.

What qualifies

A fixed air conditioning system that heats and cools, installed by us in a home in the UK. Houses, flats, and other residential accommodation. The equipment and the installation together, on one invoice from the installer.

What does not qualify

A portable or free-standing unit. A system that only cools and cannot heat. Equipment bought on its own without installation — a retailer's sale is always standard-rated. Installations in commercial buildings, offices and shops.

The deadline

Anything installed on or before 31 March 2027 is under the zero rate. After that the reduced rate of 5% applies. If you are thinking about a system for next summer, the saving is a reason to book the survey this winter rather than in June.

Heating and cooling from one system

The reason the rule includes air conditioning is that a modern system is a heat pump: it moves heat into the room in winter and out of it in summer. Our air to air heat pumps page explains what it is, and our discreet installation page covers planning permission and listed homes.

A note on advice

This page describes the rule as HMRC publishes it. It is not tax advice. If your situation is unusual — a mixed-use building, a holiday let, a new build — ask your accountant or HMRC. We will always show the VAT position clearly on the quote.

Why people choose HT Cooling

HT Cooling Ltd is an F-Gas registered company (certificate number 2004080). We hold Constructionline Gold, SMAS Worksafe and Acclaim accreditation, and our engineers are City & Guilds trained. We are rated 5.0 on Google from 50 reviews and have 66 reviews on Checkatrade, where we have been members since 2021. We are based in Lightwater, Surrey, and work across Surrey, Berkshire, Hampshire and London.

Questions people ask

Installing a permanently fixed air conditioning system that heats and cools in a home in Great Britain is zero-rated until 31 March 2027, because HMRC treats it as an air source heat pump. Cooling-only and portable units do not qualify, and neither does buying the equipment without installation.

31 March 2027. From 1 April 2027 the rate on installing energy-saving materials goes to 5%, the reduced rate.

No. The zero rate is for residential accommodation. Commercial installations are charged VAT at the standard rate.

No. The installer applies the correct rate on the invoice. You do not claim anything back.

Talk to an engineer, not a call centre

Call 03453 022 969 or send us a few details and we will come back to you the same working day.