Heat Pumps Today

18 Government policies and tax changes are set to have a significant impact on the market for heat pumps – increasing consumer demand and the need for more trained installers, according to the Building Engineering Services Association (BESA). Government incentives will drive heat pump investmen t The Chancellor’s decision to abolish VAT on the installation of domestic energy saving measures, including insulation, solar panels, and heat pumps, for five years from April 1 is a positive move, the Association believes. It will help to drive uptake of carbon reducing technologies and cut energy bills for millions of households. As well as cutting VAT from 5% to zero, Rishi Sunak also considerably simplified the rules about which types of heat pump qualify. Previously, those used for cooling were not eligible for the reduced tax rate, but the only rule that applies now is that the installation must also be capable of heating the building. “The cut in VAT is a welcome incentive for business and domestic users, but equally helpful is the simplification of what had been unnecessarily complex tax rules around heat pumps,” said BESA’s head of technical Graeme Fox. “Previously, air source heat pumps of the split air conditioning type had been specifically ruled out from the reduced VAT scheme,” he explained. “This rule was amended last year, but people were still confused. So, following lengthy talks between the BESA and HMRC, the guidance has been updated to clarify that air source reverse cycle heat pump air conditioners can be treated in the same way as monobloc heat pumps for VAT purposes.” Radical Sunak said Brexit had given him the freedom to be make ‘radical changes’ like this to VAT and he recognised the need to be more creative with tax law to support diŒerent sectors of the economy. Alongside the zero rating of energy saving measures, he also reversed an EU decision to take wind and water turbines out of scope – so they could be zero VAT rated too. “We will abolish all the red tape imposed on us by the EU,” he stated. June | July 2022 T R A I N I N G Graeme Fox "The cut in VAT is a welcome incentive for business and domestic users," The Chancellor is also doubling the size of the Household Support Fund to £1bn, which he said could be used by local authorities to provide more financial support to fuel poor households. “Retrofitting millions of homes and thousands of commercial buildings will be essential to cut carbon emissions and improve our energy security,” said Graeme Fox. “These progressive tax moves are a good start towards a more ambitious national programme that will be needed to tackle lifecycle carbon emissions and set us properly on the path to net zero.” He also urged the government to consult with the industries directly involved in the decarbonisation of heat, such as building engineering services, to fully understand the implications of its policy proposals not least on the need for investment in training and skills. “The new incentives will increase demand for competent companies and skilled individuals able to work with these technologies to ensure installations achieve their maximum potential,” said Fox. “We must, therefore, work together to develop a national training programme for low carbon heating to ensure we have the skills to deliver solutions on a scale that can both help tackle climate change and give consumers protection from rising fuel bills.” BESA’s online training Academy has developed a range of courses to support this approach not least its Heat Pump Installer course for plumbing, heating and F-gas engineers looking to upskill so they can participate in this fast-growing market. The course was developed in partnership with Worcester Bosch and the Home Builders Federation. The popularity of the training reflects growing enthusiasm for the heat pump market among installers. Recent market research carried out by Daikin UK found that seven in ten (72%) of installers believe the government’s sustainability commitments and targets are a business opportunity. More than nine in ten said they would be investing time and money in heat pump training in the next 12 months. Currently, those surveyed said heat pumps accounted for just 27% of their business but they expected this to rise to an average of 43% over the next five years. The government laid out its commitment to low carbon heating in its Heat and Buildings Strategy last year. This made clear that it regarded a significant uplift in the installation of heat pumps as key to helping the UK decarbonise people’s homes and businesses on the road to a net zero economy by 2050. Upskilling To help achieve this decarbonisation goal, the government announced that gas boilers would be banned in new build homes from 2025 and the sale of new gas boilers would stop in 2035. As a result, many installers