Heat pump grants face cuts: what it means for your costs

What's happening

The Government is reportedly planning to cut hundreds of millions of pounds from the Boiler Upgrade Scheme, the grant that helps households in England and Wales swap a gas boiler for a heat pump, according to The i Paper. The scheme's £2.7 billion budget faces a significant reduction, with the savings reportedly going towards higher defence spending.

The i Paper reports the scheme has grants of up to £9,000 and has funded almost 80,000 heat pump installations so far, with households saving an average of £230 a year on energy bills as a result. Energy and fuel poverty campaigners have criticised the proposals as short-sighted and are pushing ministers to target support at low-income households instead.

Treasury officials reportedly see the grant, which is not means-tested, as mainly benefiting better-off households: a 2026 evaluation found 56% of households using the scheme had a gross income above £52,000, against a national median of £54,740. Nesta, a research charity that backs winding the subsidy down gradually rather than ending it abruptly, warned that a sudden cut risks damaging the installer industry that has built up around the grant. Its director of sustainable future mission, Andrew Sissons, told The i Paper that firms which have invested in heat pumps could otherwise conclude the UK is "clearly not the right market" for them.

No decision has been confirmed, and the detail of any changes to the Boiler Upgrade Scheme has not yet been published.

What it could mean for your costs

If the grant shrinks or tightens its criteria, more homeowners will end up covering a bigger share of the bill themselves. Right now, a typical air source heat pump installation costs £12,900, with most jobs falling in the £10,100 – £16,800 range depending on house size and the work needed to the heating system. A smaller or means-tested grant would push many households' effective cost towards the top of that range, or back towards the £15,400 end for larger or more complex retrofits.

For now, the current support is still in place. In England and Wales, the Boiler Upgrade Scheme offers up to £7,500 off an air or ground source heat pump when it's fitted by an MCS-certified installer. In Scotland, the Home Energy Scotland grant offers up to £7,500, with an optional £7,500 interest-free loan on top. Heat pumps also qualify for 0% VAT until 31 March 2027, which is already reflected in the cost figures above — our estimates include VAT at the rate that applies, so the 0% relief is already built into what you'd actually pay.

That combination of grant and VAT relief is the main reason heat pumps have become more competitive against a new gas boiler over the past couple of years. A reduced grant would narrow that gap again, so if you've been weighing up a heat pump against a straight New boiler, it's worth getting quotes sooner rather than waiting to see how the scheme changes.

How we work out these figures

Our cost estimates are built from installer labour hours at local rates plus materials and equipment, then checked against market prices and real quotes, rather than taken from a single source. They already assume current VAT treatment, so the numbers above are what a household should expect to pay before any grant is applied — the Boiler Upgrade Scheme or Home Energy Scotland grant comes off that total, not out of a separately listed "full price."

What to do if you're considering a heat pump

If a heat pump is on your list for this winter or next, it's worth getting written quotes now while the current grant levels are confirmed, rather than waiting on a decision that hasn't been published yet. When quotes come in, compare them against the typical range for your heat pump size and property, and use our "is my quote fair" tool to check whether the price you've been given is in line with what similar jobs cost locally. See our Air source heat pump for a full breakdown of what drives the price up or down, from house size and insulation to radiator upgrades.

We'll update this article, and our cost guide, as soon as any confirmed changes to the Boiler Upgrade Scheme are published.