The Clean Market Mechanism

January 29, 2024
A couple sat on a sofa in front of a laptop and sheets of paper.

The Clean Heat Market Mechanism a.k.a The Boiler Tax

Why the price of most gas boilers has gone up by £120 + VAT in the UK from January 2024.

At City Warmth, we install, service, and repair hundreds of gas boilers every year in Brighton, Hove, and the surrounding areas.

We consider openness with and the education of our customers to be very important. We display all our prices on our website and always provide fixed quotes which are competitive in price whilst offering very high product and service levels.

From January 2024, all of our boiler installation prices went up by £120 + VAT. But then so did everyone else’s.

It makes all of our prices seem very high, and we are working on ways to make and keep them lower. While we do that, we thought we’d explain to you why prices have gone up in 2024 and the reasons behind it.

We thank you for your continued support and business.

If you want to see one reason why you should choose to use City Warmth for your boiler installation, replacement, servicing, or repair, then please follow us on Facebook, where you can see stories of how we donated over £20,000 worth of food to food banks in the Brighton and Hove area in 2023 alone! Without you choosing City Warmth for your boiler and hot water services, it would not have been possible. So THANK YOU.

The Clean Heat Market Mechanism 2024

In January 2024, the British Government launched the Clean Heat Market Mechanism (CHMM).

The idea behind the CHMM is that the UK Government wants more heat pumps sold and installed, and installed quickly. Without a faster adoption of air-source heat pumps and solar panels, the UK won’t have any chance of hitting its 2050 Net Zero Greenhouse Emissions Target.

Heat Pump Funding Recap 2023

The BUS Scheme (Boiler Upgrade Scheme Grant)

In April 2023, the UK Government offered a grant of £5,000 to any homeowner who had a Heat Pump installed in their home under the BUS scheme. This was designed to make the purchase of a heat pump more affordable and, as such, more appealing to the public. The response was not quite as big as the Government had hoped. People were still choosing to have Gas Boilers installed over Heat Pumps.

So in September 2023, this grant was increased by an additional £2,500 to a total grant of £7,500. When coupled with the 0% VAT on the supply and installation of a Heat Pump, the overall cost to have a heat pump supplied and fitted was now close to, if not the same as having a gas boiler installed. Frustratingly for the UK Government, the response from homeowners, although better, still hasn’t been enough for them to hit their installation targets. So the Government then turned their attention to the manufacturers to find another way of increasing demand.

As part of a consultation which began between the UK Government and Gas Boiler/Heat Pump Manufacturers in the summer of 2023, a Clean Heat Market Mechanism (CHMM) was proposed.

According to the government, the aim of the CHMM is to “incentivise the UK’s heating industry to invest in making heat pumps an increasingly attractive and affordable choice for families and businesses.”

The Boiler Tax or boiler levy 2024

Under the CHMM, a boiler levy was introduced as a way to hopefully increase the sale and installation of heat pumps.

The idea behind the levy was/is that the UK government wants every boiler manufacturer of a certain size (who sells 20,000 + gas boilers in the UK per year) to sell a certain percentage of heat pumps alongside the boilers. This percentage has been set at 4% for 2024.

For example, every 20,000 boilers sold, 800 heat pumps need to be sold as well.

The percentage increases to 6% for 2025, and although no official figure has been given beyond 2025, it is widely assumed that it will be 8% in 2026 and 10% in 2027 and so on.

The government wants to encourage the manufacturers to find ways to sell more heat pumps, or to sell a greater percentage of heat pumps than they currently do. Or to sell fewer gas boilers.

So what’s the levy part?

For every boiler sold over that threshold, the manufacturer will be charged a levy or fine of £3,000.

£3,000 for EVERY boiler sold.

So, for example, if a manufacturer sells 800 heat pumps in 2024 but sells 20,100 boilers, they will be fined £300,000 by the UK Government. 100 x £3,000.

How does the CHMM affect me?

Ok, so how does all of this affect you and me?

According to all the data and sales trends we have so far on domestic heat pump sales in the UK, all of the manufacturers expect to be fined to some extent at the end of 2024. None of them thinks that they will sell 4% heat pumps to gas boilers in 2024! The demand just isn’t there.

Not enough people want Heat Pumps installed in their homes, and even if they did, there aren’t enough trained and registered installers/installation firms to install them quickly enough!

And none of the manufacturers want to pay a fine on what they see as an impossible target.

The manufacturers have calculated the cost of the fine they expect the UK Government to give them at the end of 2024 and have added a proportional cost of that fine to every boiler they sell from 1st January 2024.

A price increase of £120 + VAT per boiler.

No word has been forthcoming from any of the manufacturers on what might happen to that extra money should the UK Government backtrack on the fine or should they somehow meet their heat pump sales target!

For now, we just have to pay the extra £120 + VAT and wait and see. Who knows, maybe they will offer a refund to all affected customers should they find that things are different come December 2024. We can always hope!

It should be noted that not all manufacturers sell enough boilers in the UK to meet the initial 20,000 thresholds. Notably Viessmann alongside a number of other smaller players in the UK Boiler Game do not sell enough boilers in the UK, so have not had to increase their price.

New Gas Boiler

If you were thinking of having a new gas boiler installed or find yourself needing one, 2024 is still a great time to have a gas boiler installed, and City Warmth is here to help.

As Google’s most reviewed Boiler Installation, Service, and Repair Firm in Brighton, Hove, and the surrounding areas boasting an excellent rating, we have been installing, servicing, and repairing boilers for over 15 years with 100’s of happy customers.

If you wanted to discuss having your boiler replaced, serviced, or repaired, then get in touch with the office today; we would love to help you where we can. Fill out the enquiry form on the linked web page or give us a call using the number at the bottom of the page.

To find out how much your new boiler will cost, find out by visiting our Fixed Price Boiler Page.

Air-Source Heat Pump

We also install air-source heat pumps at City Warmth. Our staff are trained to Heat Geek Accreditation level alongside holding the BPEC City and Guilds air-source heat pump installation qualification.

We can offer full home heat loss surveys and a full design service for heat pumps and/or low-temperature heating systems.

So if you wanted to explore how the installation of an air-source heat pump could benefit your home, energy bills, and the environment then give us a call or send us a message today.

The city warmth outlined icon in orange.