Here is something most heating engineers do not know, and most accountants get wrong.
Replacing a boiler in an existing heating system is generally outside CIS. Installing a new heating system is inside it.
That is HMRC’s own position. Their guidance gives replacing a central heating boiler as an example of work that is not “installation of a system”, alongside soldering a leaking pipe. The scheme catches the installation of a system. It does not catch repairing or swapping a component within one that already exists.
So a domestic swap-out on a Tuesday can sit outside CIS, while a full first-fix heating installation on a new build the following week sits inside it. Same firm, same van, different treatment.
Why this matters to you
If you have been having 20% deducted from every invoice regardless, you may have been overpaying, and that money has been sitting with HMRC instead of in your account.
If you are the one paying subcontractors and you have applied CIS to everything without thinking about it, you have created work and returns you may not have owed.
And if you have done the opposite, treated everything as outside CIS because most of your work is replacements, you may have a problem on the new-build and commercial jobs.
The answer is not a blanket rule. It is knowing which side of the line each job sits on, and having your invoicing set up so it follows.
Where else boiler installers lose money
The VAT reverse charge. When you invoice another VAT-registered contractor for work that is within CIS, you do not charge VAT. When you invoice a homeowner direct, you do. Firms doing both domestic and contract work get this wrong constantly.
Reduced-rate VAT. Certain energy-saving materials and installations qualify for reduced or zero-rated VAT. Getting this right on the right jobs is worth real money and is frequently missed.
Gas Safe, tools and training. Registration, annual assessments, calibration, tools and manufacturer training are all deductible and routinely under-claimed.
Your van. Commercial vehicles are treated very differently to cars for tax. If you have a van and are being taxed as though it were a company car, that is an expensive mistake.
Materials on account. Merchant accounts, stock sitting in the van, parts bought for jobs not yet invoiced. All of it distorts your figures if it is not handled properly.
What we do
CIS handled properly, job by job, with the system versus repair distinction applied rather than ignored.
VAT set up so the reverse charge and any reduced rating apply themselves, instead of being a judgement call on every invoice.
Job costing that separates your domestic replacement work from your contract work, so you can see which actually pays.
Cash flow forecasting that copes with the seasonality. You know October to February carries the year.
Plus the ordinary compliance. Year end accounts, corporation tax, VAT returns, payroll and self assessment.
Who we work with
UK heating and plumbing limited companies turning over between £500,000 and £5 million, anywhere in the country.
Common questions
Do boiler installers need to register for CIS?
It depends on the work. If you install new heating systems, or you subcontract to firms that do, yes. If you only replace boilers within existing systems for homeowners, often not. Most firms do both, so most need to be registered and to apply it selectively.
Is a boiler replacement inside CIS or outside it?
Generally outside, where you are replacing a boiler within an existing system. HMRC gives this as an example of work that is not installation of a system.
What about a full new heating installation?
Inside CIS. Installing systems for heating is explicitly a construction operation.
Do I charge VAT to a main contractor?
Not where the reverse charge applies and they are not the end user. They account for the VAT instead.
Can I claim my Gas Safe registration?
Yes, along with assessments, calibration, tools and training.
Book a call and we will go through your last twelve months of jobs and tell you which should have been inside CIS and which should not.
Common questions
Does CIS apply to boiler installers?
Replacing a boiler in an existing heating system is generally outside CIS. Installing a new heating system is inside it. That is HMRC’s own position. Their guidance gives replacing a central heating boiler as an example of work that is not “installation of a system”, alongside soldering a leaking pipe. The scheme catches the installation of a system.
Does the VAT domestic reverse charge apply to boiler installers?
It follows the CIS answer above. Where the work falls inside CIS and your customer is VAT registered, registered under CIS and is not an end user, the reverse charge applies and you do not charge VAT. Where the work falls outside CIS, or the customer is an end user or a homeowner, you charge VAT as normal. Two jobs in the same week can be treated differently.
Who we work with
- Sector: construction only. Contractors, subcontractors and the trades that work on site.
- Turnover: roughly £500,000 to £5 million a year.
- Structure: mostly limited companies, plus established sole traders and partnerships.
- Where: our office is in Cannock, Staffordshire. We work with clients across the UK on cloud accounting.
Who we are not for: businesses outside construction, property developers, brand new start-ups with no trading history, and anyone who wants filing done and nothing else.
If you are not sure, here is the longer version. We will tell you on the first call if we are not the right fit.