Heat pump grants may be cut at the Budget: what it means for costs

If you are weighing up an air source heat pump, the grant is the part to watch. An opinion piece in The i Paper says the government looks set to cut heat pump subsidies at the Budget on 28 October. Nothing has been confirmed. The grant that applies today is still in place.

What has been reported

The piece is by freelance environment writer Tom Bawden. According to The i Paper, the government paid record heat pump grants in August. It says the subsidy pot, worth £2.7bn, is expected to be trimmed by hundreds of millions of pounds to help fund defence spending. The author says how big the cut will be, and when it would start, is "anybody's guess".

The same article mentions other ideas that are being floated but are also unconfirmed:

• higher government sales targets for boiler makers, in the hope of bringing heat pump prices down
• low-interest loans for green technology, which it says are likely to be unveiled soon

It also reports these figures, which we have not checked ourselves:

• Running costs: a typical household could save between £110 and £350 a year against a gas boiler, according to the charity Nesta.
• Energy bills: they are predicted to rise 16 per cent in January, to £1,999 a year for a typical dual-fuel home.
• Gas dependence: 85 per cent of British households heat with a gas boiler.
• Rented homes: a minimum EPC C rating is due for rented properties in 2030.

It is an opinion column, so the argument that heat pumps are the best route away from gas is the author's view.

What is in place now

The government fact sheet we work from still lists the following:

• Boiler Upgrade Scheme: £7,500 off an air source or ground source heat pump in England and Wales. The installer must be MCS certified. The article puts grants at £7,500 to £9,000, but £7,500 is the figure we can confirm.
• Scotland: Home Energy Scotland offers a grant of up to £7,500, plus an optional £7,500 interest-free loan.
• VAT: 0% VAT applies to installing energy-saving materials, including heat pumps, insulation, solar panels and batteries, until 31 March 2027.
• Warm Homes Plan: published in January 2026, it commits £15bn to 2030. That includes grants for low-income households and low- or zero-interest loans that are being phased in.

We cannot tell you whether the Boiler Upgrade Scheme will change on 28 October, or what would replace it. If you read otherwise elsewhere, check the source.

What it means for cost

For a typical air source heat pump, we put the mid-range cost at £12,900, with most jobs falling in £10,000 – £16,700. Basic systems start around £9,700, and premium installations reach £15,400. Those figures are before any grant. Our guide, Air source heat pump, explains what drives the spread.

The grant matters because of what it does to the comparison with a gas boiler. A like-for-like replacement boiler typically costs £2,800 in our model, in a range of £2,200 – £3,650. With £7,500 off, a heat pump gets much closer to that figure. Without it, the gap is several times larger. If the grant is cut, the cost to you of the same heat pump rises pound for pound.

We build these figures from labour hours multiplied by local rates, plus materials. We then check them against market prices and real quotes. A grant does not change that calculation, so a cut would not make installers cheaper. It would change what you pay out of pocket.

Should you rush?

Moving quickly is the article's advice. We would add some caution.

• Do not sign a poor quote to beat a deadline. A badly specified heat pump costs more over its life. Use our "is my quote fair" tool to compare any quote with our figures first.
• Check the installer is MCS certified. Without that, you cannot claim the Boiler Upgrade Scheme grant.
• Ask how the grant is handled. Find out when it is applied and what happens if the rules change between your quote and your installation date. Get the answer in writing.
• Think about the building first. The article notes that a heat pump delivers its full benefit in a reasonably well insulated home. Insulation is often worth doing alongside or before the heat pump. Our external wall insulation guide, External wall insulation, shows a typical cost of £26,000. The 0% VAT on insulation also runs until 31 March 2027.

If you are not ready to buy

If you cannot get a heat pump installed soon, a decision can still wait. The 0% VAT relief runs for several more months. Loan schemes may be announced, although none is confirmed. And a boiler replacement remains a sensible option if yours is failing. Boiler work must be done by a Gas Safe registered engineer. The new boiler must also meet minimum efficiency standards, which include added controls on a combi installation.

Solar panels are another way to cut bills, and they carry the same 0% VAT relief. A typical 6 kWp system is £12,500 in our model, and we cover it in Solar panels.

What we will do next

The Budget is on 28 October. We will update our guidance and figures once the government confirms any change to grants. Our live cost model already shows heat pump prices before grant, so the only thing that will move is what you can claim off them.