Boiler Tax? What is the impact on heating costs

Boiler prices are to go up in January 2024. The government has confirmed that the clean heat market mechanism will be going ahead.

Starting this year, in January 2024, the government has confirmed that the clean heat market mechanism will go ahead. The change means that boiler manufacturers, including Worcester Bosch, Vaillant, Ideal, and Baxi, have all announced they will introduce a new levy (or ‘boiler tax’) on customers buying oil and gas boilers. The goal is to increase the sales and installation of air and ground-source heat pumps in homes to work towards the aim of  ‘enhancing the UK’s self-sufficiency and generate more clean, affordable, homegrown power’. 

Boiler thermostat

What is the clean heat market mechanism? 

 

The Clean Heat Market Mechanism (CHMM) is a government scheme aimed at making homes more energy efficient and reducing the country’s energy consumption to meet carbon emission targets. 

 

Why have boiler manufacturers introduced a new levy or ‘Boiler Tax’? 

 

Boiler manufacturers have announced they will be introducing a levy on customers buying oil and gas boilers of around £120. The reason for this is because of the government’s introduction of the ‘clean heat market mechanism’. The proposal is that boiler manufacturers must match or substitute 4% of their boiler sales with heat pumps. Failing to do this, manufacturers will be fined £3000 for every heat pump they are short of. 

 The target for the UK government is to have 600k heat pumps installed annually by 2028; however, with changes in September 2023 to the ‘clean heat market mechanism’ including:

  • Deferring the ban on oil and LPG boilers from 2026 to 2035
  • Around 20% of homes will be exempt from having a heat pump due to the expense and not having a suitable home for one to be fitted.
  • Scrapping the requirement for landlords to raise the EPC rating of their properties to band level C by 2028

It means that it will be hard for manufacturers to reach these targets with these limitations. 

 

What does the price increase mean for you? 

 

Although this scheme is aimed at boiler manufacturers, this levy will ultimately affect homeowners across the UK. With 78% of UK residents having gas central heating, this means the possibility of an increase in price when it comes time to replace your boiler. This also means that lower-income households needing to replace their boiler may opt for a cheaper, less efficient boiler, resulting in more repairs and costs in the long run.

Gas-elec aims to continue to provide the best value for customers to get the right boiler for them at the best price.