Boiler Upgrade Scheme 2026: Get £7,500 Towards a Heat Pump

What is the Boiler Upgrade Scheme?

The Boiler Upgrade Scheme (BUS) is a government grant programme that subsidises the cost of switching from fossil fuel heating to low-carbon alternatives. Launched in April 2022 and administered by Ofgem, the BUS provides a £7,500 voucher that your installer redeems directly — you simply pay the balance.

The scheme is open to homeowners and some landlords in England and Wales. Scotland residents should look at the Home Energy Scotland (HES) grant scheme instead.

Why the government is offering these grants

The UK government has committed to phasing out new gas boiler installations by 2035. Heat pumps are the primary domestic alternative — but their upfront cost (typically £10,000–£20,000 installed) has deterred many households. The BUS bridges that gap and supports the growth of the UK heat pump supply chain.

Grant amounts in 2026

The grant was uplifted from £6,000 to £7,500 in October 2023 and has remained at this level. No further changes have been announced for 2026.

Who is eligible?

To qualify for the BUS grant:

1. You own the property (or are a private landlord — tenants cannot apply directly).
2. The property is in England or Wales.
3. You are replacing an existing fossil fuel heating system (gas, oil, LPG boiler, or direct electric heating).
4. The property has a valid Energy Performance Certificate (EPC) with no outstanding recommendation for loft or cavity wall insulation — or you can provide a technical survey showing the property is not suitable for that insulation.
5. Your chosen installer is MCS certified (Microgeneration Certification Scheme).
6. The heat pump must be MCS certified equipment.
7. The property must not have received a previous BUS grant for the same address.

New-build properties

New-build properties completed after 1 April 2022 are generally not eligible, as they should have been designed with low-carbon heating from the outset.

Multiple properties

Landlords can claim one grant per property, but the total number of grants across your properties may be capped — check current Ofgem guidance, as limits have been adjusted since launch.

How the application process works

The BUS process is installer-led:

1. Get quotes from MCS-certified heat pump installers. Use the MCS Find an Installer tool at mcscertified.com.
2. Check your EPC at epc.opendatacommunities.org. Confirm no outstanding insulation recommendations (or arrange insulation first).
3. Agree on the installation — your installer submits an application to Ofgem for a voucher on your behalf before the work begins.
4. Ofgem issues a voucher to the installer (usually within a few days). It is valid for three months.
5. Installation is completed. The installer redeems the voucher with Ofgem.
6. You pay the installation cost minus £7,500.

You never receive the £7,500 as cash — it flows directly between Ofgem and the installer.

EPC requirement explained

Your EPC is the key document that determines whether insulation improvements are recommended for your property. The BUS rules state:

• If your EPC recommends loft insulation or cavity wall insulation, you must address this before a heat pump is installed under the scheme.
• A loft insulation improvement typically costs £300–£500.
• Cavity wall insulation typically costs £500–£1,500 (often funded through ECO4 if you qualify on income grounds).

This requirement exists because heat pumps perform significantly better in well-insulated homes. A poorly insulated property may need the heat pump running continuously and at higher temperatures, reducing efficiency and increasing running costs.

If your EPC shows solid wall insulation as a recommendation (much more expensive), this does not block your BUS application — you can proceed without it.

Getting a new EPC

An EPC typically costs £60–£120 and is valid for 10 years. If your existing EPC is outdated or you think your property has improved since it was assessed, commission a fresh one before applying.

Typical installation costs and your net outlay

Heat pump installation costs vary significantly by property size, location, and installer. Indicative ranges for 2026:

Ground source heat pumps require drilling boreholes or laying horizontal ground loops, explaining the higher cost. They are generally more efficient (higher COP) but the larger upfront cost makes payback periods longer.

Combining the BUS with other schemes

ECO4 (Energy Company Obligation)

ECO4 is a separate government scheme where energy suppliers fund insulation and heating upgrades for low-income households. If you qualify for ECO4 (based on receiving means-tested benefits), you may be able to get loft and wall insulation installed free of charge — addressing the EPC requirement before applying for the BUS grant for your heat pump.

Smart Export Guarantee (SEG)

If you are also installing solar PV panels, you can earn export payments for electricity you export to the grid under the Smart Export Guarantee. SEG rates are set by energy suppliers and typically range from 3p to 15p per kWh exported. Heat pumps and solar PV work well together: the panels generate electricity during the day, some of which powers the heat pump.

VAT reduction

Heat pump installations are currently subject to 0% VAT (reduced from 20% in April 2022). This represents a significant saving on a £12,000 installation — £2,400 of VAT you do not pay. The 0% rate applies until 2027.

Running costs: is a heat pump cheaper to run?

This is the key question for most households. Heat pumps are more energy-efficient than gas boilers — a well-installed ASHP typically achieves a Coefficient of Performance (COP) of 2.5–4, meaning every 1 kWh of electricity produces 2.5–4 kWh of heat. However, electricity is more expensive per unit than gas.

In 2026, under the Ofgem price cap:

• Electricity: approximately 24p/kWh
• Gas: approximately 6p/kWh

A heat pump with COP 3.0 uses 1 kWh of electricity to produce 3 kWh of heat, at a cost of 8p per kWh of heat — comparable to gas. As electricity prices fall relative to gas (expected over the next decade), heat pumps become progressively cheaper to run.