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Useful Information

Things to know.

Reduced VAT on Residential Installations

As part of its commitment to reducing the emission of gases responsible for global warming, the Government has awarded a reduced rate of VAT to the supply and installation of heat-pump air-conditioning systems in residential properties.

They state that "reducing the rate of VAT will encourage the increased use of such energy efficient products and will have a positive effect in reducing carbon emissions".

Previously, the rate of VAT applied to our residential sales has been the standard 17.5%.  The new rate of VAT on qualifying equipment is now just 5%.

Example saving

The supply and installation of a heat-pump, wall-mounted system is priced at £1250.00 ex Vat.  With VAT applied at the standard rate of 17.5%, the total cost to the customer is £1468.75.

The same job with VAT now applied at the lower rate of 5% reduces the total cost to the customer to £1312.50, in turn providing a saving of £156.25!

When you consider that the electrical consumption of the example heat-pump system is less than a quarter of that consumed by any other form of electric heating,  the savings (both short and long-term) are obvious, in addition to which a facility to cool your home is gained.
 

Enhanced Capital Allowance (ECA)

In 2001 the Government introduced the Enhanced Capital Allowance Scheme (ECA) to reward businesses that invest in energy-saving equipment.

Many of the air conditioning systems offered by Blue Sky are listed on 'The Energy Technology List' managed by the 'Carbon Trust' and incorporate both energy-efficient 'inverter' and 'heat-pump' technologies.
The scheme enables businesses to offset 100% of their capital expenditure against taxable profits within the same financial year the investment is made. This can deliver a helpful cash flow boost and a shortened payback period.

Enhanced Capital Allowance is not only awarded to the cost of the equipment being installed, but also to the costs associated with installing such technology. This means that the total project cost  of installing qualifying systems inclusive of all associated labour and materials costs, becomes 100% tax deductible.
Claims for ECAs are made in the same way as other capital allowance claims i.e. the Corporation Tax Return for companies and the Income Tax Return for individuals and partnerships.

For more details of the Enhanced Capital Allowance scheme browse the links below.
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