New Government Gas Boiler Tax in 2024
The UK government recently announced a tax on new gas boilers, but this has since been postponed. Find out more about this new tax and the reason for the postponement.
What Happened to the Government’s Gas Boiler Tax?
The Clean Heat Market Mechanism (CHMM), commonly known as the “gas boiler tax” was a government policy designed to ease the transition from high carbon emitting gas and oil boilers to low-carbon heating in the UK.
Its aim was to encourage homeowners and businesses to install more sustainable alternatives, like heat pumps and biomass boilers.
The scheme was meant to launch in 2024 starting with a 4% tax on fossil fuel boiler manufactures to incentivise them to increase their sales of ground and air heat source pumps.
However, this tax immediately had the effect of boiler manufacturers increasing their gas boiler price, on average, by £120 on new boilers and was seen by many people in the boiler industry, parliament, and the public in general, as being implemented too soon, and creating additional costs on homes and businesses during the cost-of-living crisis.
To also aid the transition to a greener economy the Clean Heat Grant Scheme provided financial incentives, in the form of grants, to help offset the upfront costs of installing low-carbon heating systems. These grants were intended to make the transition more affordable for homeowners, landlords, and businesses, thereby accelerating the uptake of cleaner heating technologies across the country.
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When will the gas boiler tax come in?
The Clean Heat Mechanism was due to start in 2024, but due to the backlash from businesses, from MPs in parliament, and the general public the government’s scheme has been delayed until 2035 This allows household who will most struggle to make the switch to low carbon alternatives (ground or air source heat pumps and biomass boilers) to make the transition over a longer period.
Why was the gas boiler tax postponed?
The “tax” was intended to make boiler manufacturers sell more heat pumps to their customers, but in fact it made them raise their prices to cover the fines the government intent to impose upon them if they did not meet the target of making 4% of their sales from sustainable low carbon alternatives, like heat pumps.
The Guardian newspaper reported:
“Boiler manufacturers have saddled families with indefensible price hikes – this is not right,” a government source said. “We’re looking again at the policy and expect manufacturers to do the right thing and remove their price hikes immediately.”
The energy secretary, Claire Coutinho, who was appointed in September 2023, was said to be leaning towards abandoning the target and associated fines for manufacturers, which has now been implemented by the government. She reached this decision after determining that it would negatively impact consumers.
Why did the Government introduce the gas boiler tax?
The tax was part of the UK government’s broader efforts to reduce greenhouse gas emissions and achieve its climate targets, including the goal of reaching net-zero emissions by 2050. By promoting the adoption of low-carbon heating solutions, such as heat pumps powered by renewable energy sources, the Clean Heat Grant Scheme aimed to contribute to the decarbonisation of the heating sector and the overall transition to a greener economy.
Here at Add Heat we supply & install Heat Pumps, a low carbon alternative to gas and oil boilers. The manufacturers we represent are all developing new, green alternatives, to add to their traditional boilers and central heating solutions.