Money desk · chart page
VAT on air conditioning installation and heat pumps
VAT on air conditioning installation can be 0% until 31 March 2027, because HMRC treats most fixed AC as air source heat pumps; portables pay 20%.
By the Cooler Indoors desk · figures checked · 3 charts · sources · methods
VAT on air conditioning installation can be zero. HMRC zero-rates fitted air source heat pumps as energy-saving materials until 31 March 2027, and its notice on the subject says most air conditioning units are heat pumps of that kind. Portable units, and kit bought without fitting, are charged the standard 20%.
Source: HMRC VAT Notice 708/6, energy-saving materials and heating equipment · checked 29 October 2026
How we read this Rates as HMRC's notice states them (notice last updated 31 January 2024). HMRC looks at each case, and the notice does not deal separately with cooling-only units, so the installer's invoice is what settles it.
Show the numbers
| Label | % | Note |
|---|---|---|
| Installed fixed unit, to 31 Mar 2027 | 0% | |
| Installed fixed unit, from 1 Apr 2027 | 5% | |
| Portable unit | 20% | |
| Kit bought without installation | 20% |
What VAT applies to air conditioning installation?
For a fixed unit supplied and fitted by the same business, the rate is 0% until 31 March 2027. HMRC's table of VAT rates on goods and services, updated on 10 July 2026, lists installed air source heat pumps at 0% until that date, with VAT Notice 708/6 as the detailed rulebook.
The relief applies to the supply and fitting together. Notice 708/6 is clear that energy-saving materials sold without installing them are standard-rated.
Does ordinary air conditioning count as a heat pump for VAT?
Usually, in HMRC's view. Section 2.15 of Notice 708/6 puts it this way: "most air conditioning units are air source heat pumps", because a fixed unit can be reversed to draw heat out of a room as well as into it.
The condition is that the unit is permanently fixed. HMRC says only air source heat pumps that are fixed, and not portable or moveable, count as energy-saving materials. A wall-mounted split with its outdoor unit bolted to the house fits that description; a unit on castors does not.
| What you buy | VAT rate | Why, in HMRC's terms |
|---|---|---|
| Fixed split or multi-split, supplied and fitted, by 31 Mar 2027 | 0% | Installed energy-saving material |
| Same job from 1 Apr 2027 | 5% | Zero rate reverts to reduced rate |
| Portable or moveable unit | 20% | Not permanently fixed |
| Split kit bought online, fitted by someone else | 20% | Supplied without installation |
| Electricity to run any of them, Oct 2026 to Mar 2027 | 0% | Temporary relief on household electricity |
Why is a portable air conditioner charged 20%?
Because it is not fixed to the building. HMRC's notice excludes heat pumps that are portable or moveable, so a single-hose or dual-hose box from a shop carries standard-rate VAT however efficient it is.
Supply-only split kit is also 20%, and there is a second reason not to buy it that way. Sellers of split kit must ask who the qualified technician fitting it will be. Connecting, charging, servicing and decommissioning a split are jobs for an F-gas certified engineer from a certified firm, never the householder. Our page on F-gas and electrical rules sets out who can do what.
What happens to the rate on 1 April 2027?
It rises to the reduced rate of 5%. Notice 708/6 says the zero rate ends on 31 March 2027 and that from 1 April 2027 these installations "will revert to the reduced rate of VAT of 5%".
Source: HMRC VAT Notice 708/6 · checked 29 October 2026
How we read this Worked example, not a quote. Input: £1,000 of pre-VAT work at 0%, 5% and 20%. We use £1,000 because there is no official air-to-air installed cost to work from.
Show the numbers
| Label | £ per £1,000 | Note |
|---|---|---|
| Installed, to 31 Mar 2027 | 0 | |
| Installed, from 1 Apr 2027 | 50 | |
| Portable or supply-only | 200 |
If your job is booked close to the change, ask the installer which rate their invoice will carry. Our installation cost page shows what Boiler Upgrade Scheme data says about whole-system prices.
Does Northern Ireland get the same rate?
Yes. VAT is UK-wide, and nidirect notes that installed energy-saving materials, including heat pumps, now benefit from a zero rate in Northern Ireland too. There is no home heat pump grant open there.
The grant side differs by nation. England and Wales have a £2,500 Boiler Upgrade Scheme grant for air-to-air systems, which our BUS grant figures explain, including why it may not be claimable yet.
Is there VAT on the electricity to run it?
Not this winter. Ofgem's October to December 2026 announcement says the government removed VAT from electricity bills between 1 October 2026 and 31 March 2027. Gas still carries 5%.
Source: Ofgem, changes to the energy price cap, 1 October to 31 December 2026 · checked 29 October 2026
How we read this VAT rate built into the GB electricity price cap in each period. Ofgem warns that the October figures cannot be compared directly with earlier ones because of this change.
Show the numbers
| Label | % | Note |
|---|---|---|
| Apr–Jun 2026 | 5% | |
| Jul–Sep 2026 | 5% | |
| Oct–Dec 2026 | 0% | Until 31 Mar 2027 |
Before October, capped unit rates included 5% VAT; Ofgem's July to September notice gives 26.11p/kWh on that basis. The running-costs figures turn the current 26.32p rate into pence per hour for real units.
What should the installer's invoice show?
It should show the VAT rate applied to the supply and fitting as one job. Where a Boiler Upgrade Scheme grant is involved, GOV.UK's application steps say the grant comes off what you pay and appears on the quotation and invoice too. HMRC puts the decision on the supplier, so the invoice is your record. If a quote shows 20% on a fixed, fitted heat pump, ask the installer which part of Notice 708/6 they are relying on.
Questions this data raises
Does the zero rate apply to a cooling-only air conditioner?
HMRC's notice does not address cooling-only units directly. It talks about air source heat pumps that can be reversed, so check the rate with the installer before you commit.
Can I buy the unit myself and pay the installer for labour only?
You can, but the equipment would carry 20% because it was supplied without installation. Split kit also needs an F-gas certified engineer named at the point of sale.
Is a dual-hose portable taxed differently from a single-hose one?
No. Both are moveable, so HMRC's fixed-installation condition rules them out of the relief and they carry 20%.
Does a split bought mainly for winter heating get the same relief?
Yes, if it is fixed and fitted by the supplier. HMRC names fixed air source heat pumps as energy-saving materials whether they are used to heat or cool.
Sources for this page
- HMRC VAT Notice 708/6, energy-saving materials and heating equipment gov.uk
- table of VAT rates on goods and services gov.uk
- nidirect nidirect.gov.uk
- October to December 2026 announcement ofgem.gov.uk
- July to September notice ofgem.gov.uk
- GOV.UK's application steps gov.uk
All checked 29 October 2026. How we choose and read sources: Methods & sources.