Government reportedly in talks to scrap boiler tax due to price hikes from boiler companies

It has been reported the Energy Secretary, Claire Coutinho, has held talks to scrap the proposed boiler tax that was set to be introduced in April this year.

Coutinho and other government ministers are potentially on the verge of caving in to boiler company demands after multiple companies announced their intention to raise the price of their boilers by up to £120 in response to the boiler tax.

Despite the government's commitment to increase the number of air source heat pumps the government have been forced into rethinking their strategy due to the potential rise in costs to homeowners.

What is the boiler tax?

The 'Boiler Tax' comes from the government's Clean Heat Market Mechanism (CHMM) where boiler companies will be forced to offset 4% of their yearly gas or oil boiler sales with heat pumps, escalating to 6% starting April 2025, or face fines.

For each unit companies fall short by they will face a fine of £3,000 each time with the aim of decarbonising the home heating market.

The government also hope this will help reach the target of 600,000 heat pump installations each year.

Companies announced price rises in response to boiler tax

Boiler companies have reacted to the plans by raising the prices of their boilers in anticipation of the fines.

Numerous companies have claimed the targets are unrealistic and would leave them no choice but to face the fines and that this cost will have to be passed onto customers.

Worcester Bosch, Vaillant, and Baxi have all announced their intentions to raise the price of their boilers by up to £120 with Baxi directly referring to it as a "market mechanism levy".

Energy Secretary reportedly holds talks to remove boiler tax

Following the announcement by some boiler companies over their intentions to raise the price of their boilers the Energy Secretary, Claire Coutinho, has reportedly held talks to scrap the boiler tax.

The Sunday Times has claimed Coutinho has held discussions with boiler companies and government officials about scrapping the scheme

The Sunday Times also revealed one government source who said: “Boiler manufacturers have saddled families with indefensible price hikes — this is not right. We’re looking again at the policy, and expect manufacturers to do the right thing and remove their price hikes immediately.”

This is despite a Department for Energy Security and Net Zero spokesman previously stating the CHMM targets were "realistic and fully achievable" and the government provided "flexible options to make heat pumps easy and affordable to install".

However, Mike Foster, Chief Executive of the Energy and Utilities Alliance, who represent boiler companies, said: "If the government formally announce the scrapping of the fines then I expect the boiler manufacturers to respond immediately and announce they are rescinding their price increases."