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ClimateTech company tepeo is taking a stand against the Government’s decision to exclude heat batteries from VAT relief by offering up to £2,000 cashback on its Zero Emission Boiler (ZEB). This initiative underscores the need for a more inclusive tax structure to promote sustainable heating solutions.
The Government’s Autumn Statement retained VAT relief for heat pumps and biomass boilers but failed to extend it to other technologies like heat batteries, which play a crucial role in reducing carbon emissions. tepeo’s decision to absorb the VAT cost themselves highlights the potential benefits of a fairer approach to VAT relief for all low-carbon heating technologies.
“The Government’s decision leaves homeowners with limited access to affordable low-carbon heating options. At tepeo, we want to show how VAT relief could make a real difference,” said Johan du Plessis, CEO of tepeo. “We’re a young company, and absorbing this VAT cost is a significant decision for us, but it’s crucial that UK households are given the opportunity to switch to greener heating technologies without being penalised.”
The ZEB offers a practical, low-carbon alternative to fossil fuel boilers, integrating with existing systems to provide a seamless transition for households. By shifting energy consumption to off-peak times, heat batteries like the ZEB enhance energy security while reducing costs.
Despite efforts by MPs and industry leaders, including a campaign led by Afzal Khan MP, VAT relief for heat batteries was not included in the Autumn Statement. Nevertheless, heat batteries remain essential for homes unsuitable for heat pumps or with limited space.
Afzal Khan MP remarked: “Prior to the Autumn Statement, the Government took the decision to enable social housing providers to claim up to £15,000 per property for the installation of alternative low-carbon heating solutions, such as heat batteries. Awarding VAT relief to heat batteries represented the next natural step for the Government, which would have further incentivised the adoption of low carbon home heating.”
He added: “Whilst this isn’t the outcome that I, my colleagues or industry would have hoped for, I will continue to advocate for the increased adoption and roll out of low carbon heating technologies, such as heat batteries, which I hope will be awarded VAT relief at the next fiscal event.”
Miatta Fahnbulleh, Minister for Energy Consumers, highlighted the usefulness of heat batteries for homes with space limitations, demonstrating a gradual change in Government perspectives. However, heat batteries remain financially disadvantaged compared to heat pumps.
The heating sector, supported by parliamentary leaders, is rallying behind tepeo’s call for a tax system that treats all green technologies equally. Trials of the ZEB have shown its effectiveness in reducing energy bills and supporting the electricity grid, making tepeo’s VAT discount a timely intervention to drive change.
“We hope our initiative will inspire policymakers to take action,” concluded du Plessis. “If we want to achieve Net Zero, we need a fair and inclusive tax system that supports all green technologies and doesn’t favour the wealthy and those in larger homes. The time to act is now.”
