Business

Big manufacturers urged to refund ‘boiler tax’ to ‘ripped off’ consumers

Three of the “big four” boiler manufacturers for the UK cannot guarantee customers will be refunded the so-called “boiler tax” that companies added to new boilers earlier this year.

In January boiler-makers hiked costs by up to an extra £120 per boiler to cover anticipated penalties for a green scheme – which has now been delayed.

Ministers had told them to ensure 4% of their sales were heat pumps rather than gas boilers, or they would face a £3,000 fine per missed installation.

As heat pumps run on electricity rather than gas, the move was designed to boost energy security, and lower air pollution and greenhouse gas emissions.

The energy security secretary Claire Coutinho accused the manufacturers of “price gouging”, and told LBC heat pump sales were already so high that they anticipated few penalties.

Boiler makers said the unachievable targets would create multi-million-pound penalties they could not afford, so upped the price of gas boilers to cover the anticipated charges.

But in March, the government delayed the heat pump target – also known as the clean heat market mechanism (CHMM) and dubbed the “boiler tax” – to April 2025, following resistance from the boiler industry.

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Three of the “big four” boiler manufacturers, Bosch, Vaillant and BAXI, this week told Sky News they were refunding the “boiler tax” cash to the distributors and retailers to whom they had sold boilers.

But they said it was those companies’ responsibility to return the money to households, because manufacturers tend not to have a direct relationship with consumers themselves.

No one from Ideal Heating was available to comment or confirm its plans.

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‘Out of pocket’ households

It comes as energy thinktank ECIU estimates the four firms together would have collected £40m via the so-called boiler tax, based on the average amount levied and an average number of boilers sold per month in the UK.

Jess Ralston, ECIU’s head of energy, said: “The manufacturers introduced the boiler tax, not the retailers, so it feels like they are passing the blame to a middle party.

“They had been suggesting the fines should be removed, so they must have thought it was a possibility they’d have to refund the boiler tax – it doesn’t seem they put in place any mechanisms for that eventuality, leaving someone else on the hook.”

Gillian Cooper, director of energy at Citizens Advice, said: “Now that boiler retailers have rightly been promised refunds, it’s essential they pass those refunds on to consumers.

“Anyone who purchased a boiler between 1 January and the end of March this year may have been forced to pay more than they should have, leaving them out of pocket.

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“Not only have people been ripped off, but the government’s decision to delay the Clean Heat Market Mechanism in response to manufacturers’ pressure will leave consumers exposed to volatile gas prices for longer.”

After the government confirmed the CHMM delay, retailer Wolseley, which sells boilers made by Vaillant, confirmed it was taking responsibility for issuing refunds on boiler sales.

Clean home heating company Warmur urged boiler manufacturers to “proactively contact customers they know to have had a boiler fitted since 1st January and help them arrange a refund”.

What did boiler manufacturers say?

BAXI said its consumers will receive a refund because it is returning “any funds already collected to our merchant distributors, who then supply products to a 35,000-strong installer community, who then sell onto consumers”.

“We are part way through completing that process, although we stopped adding the surcharge from Monday 18 March.

“In the small number of cases where we sell direct to consumers through warranty relationships, we will be refunding the surcharge to them directly.”

A Vaillant spokesperson said: “Vaillant has communicated with its direct merchant customers that the boiler levy has been removed as of the 19th March 2024 and all levies charged since 1st January 2024 will be refunded in full.”

“Vaillant can only ensure our direct customers are refunded, and it is not visible to us to what extent installers and merchants have passed the levy on.”

A Bosch spokesperson said: “We have refunded in full to our merchant customers 100% of the levy charged on boilers we sold to them in the period 1 January 2024 – 15 March 2024.

They added: “Our trading relationship is with the merchant and we have returned the levy to them. We do not sell boilers to end consumers.”

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