The Boiler Upgrade Scheme pays £7,500 towards an air source or ground source heat pump in England and Wales, and £9,000 for homes heated by oil or LPG with no mains gas between 21 July 2026 and 31 March 2027. You do not apply yourself. The MCS certified installer who fits the heat pump applies for the grant and takes it off your quote, and the installation is 0% VAT on top. A typical 3 bed home that would cost £8,000 to £15,000 before the grant therefore pays £500 to £7,500 after it.
Key takeaways
- Boiler Upgrade Scheme (BUS): £7,500 off an air or ground source heat pump in England and Wales.
- Oil or LPG heated homes with no mains gas get £9,000 from 21 July 2026 to 31 March 2027.
- The MCS certified installer applies and deducts the grant from the quote; you sign to confirm.
- The old rule that you had to insulate your loft and cavity walls first was removed in 2024.
- Heat pump installation is also 0% VAT until 31 March 2027, then 5%.
- Low income households in an EPC D to G home may get a heat pump funded through the Warm Homes: Local Grant instead, but the council chooses the installer.
What does the Boiler Upgrade Scheme pay in 2026?
The Boiler Upgrade Scheme is the only direct cash grant for a heat pump that is open to most homeowners in England and Wales. It pays a flat £7,500 towards an air source or ground source heat pump that replaces fossil fuel heating (gas, oil, LPG) or electric heating. The grant is the same whatever the heat pump costs.
From 21 July 2026 to 31 March 2027 the grant rises to £9,000 for homes heated by oil or LPG that have no mains gas connection. That mainly helps rural homes in Surrey, Kent and Hertfordshire rather than London, where almost every street has gas.
The scheme is funded through to 2029/30, with £2.7bn set aside, so the money will not run out this winter. Scotland and Northern Ireland run their own heat pump schemes with different rules; this guide covers England and Wales only.
Who qualifies for the heat pump grant?
The scheme is for people who own the home the heat pump goes into, in England or Wales, and who are replacing fossil fuel or electric heating with a heat pump fitted by an MCS certified installer. There is no income test.
The installer checks the property details against the scheme rules before they quote, so if something rules your home out you find out before you commit. The full conditions are on the government Boiler Upgrade Scheme page.
How does the installer apply for you?
You never fill in the grant form. The MCS certified installer does, and the money is paid to them, which is why the grant appears as a deduction on your quote rather than as cash in your account.
- A heat loss survey of the home, room by room, to size the heat pump, the hot water cylinder and any radiators that need changing.
- A written quote showing the full price, the £7,500 (or £9,000) grant as a deduction, and the amount you pay.
- The installer submits the grant application in your name.
- You are asked to confirm that you agree to the installer applying on your behalf. You sign, and the grant is approved.
- The heat pump is installed and commissioned, and the installer claims the grant. You pay the net amount only.
Heat pumps we arrange are project-managed by Stay Warm and installed by accredited, MCS certified installers, which is the requirement for the grant. The air source heat pump service page explains what is included.
What does a heat pump cost after the grant?
Typical installed prices for an air source heat pump, including the outdoor unit, a hot water cylinder, controls, commissioning and the radiator changes most homes need, look like this. All figures are indicative ranges, not a quote.
| Home | Typical cost before grant | Grant | You pay |
|---|---|---|---|
| 2 or 3 bed terrace or semi, mains gas | £8,000 to £15,000 | £7,500 | £500 to £7,500 |
| 4 bed or larger, mains gas | £12,000 to £20,000 | £7,500 | £4,500 to £12,500 |
| 3 bed home on oil or LPG, no mains gas (to 31 March 2027) | £8,000 to £15,000 | £9,000 | £0 to £6,000 |
VAT is 0% on the whole heat pump installation until 31 March 2027, so there is nothing to add to those figures. After that date the rate is due to become 5%, which on a £12,000 install is £600.
Why insulation still matters for a heat pump
A heat pump runs at flow temperatures of 35 to 55°C, well below a gas boiler. It works by keeping a well insulated home gently warm, not by blasting heat into a leaky one. In a poorly insulated house the survey will call for a bigger unit and bigger radiators, and running costs will be higher than the brochure suggests.
Loft top-ups (£400 to £900) and draught proofing (£250 to £700 for a whole house) are the cheap first steps. Solid wall homes, which is most of London, get the largest gain from external wall insulation or internal wall insulation. The guide do I need to insulate before a heat pump works through the order. We insulate with our own team, PAS 2030:2023 certified and TrustMark registered, and every insulation install comes with a 10-year manufacturer warranty and a 25-year insurance backed guarantee.
The starting point either way is a free heat loss survey. It tells you which fabric measures are worth doing and gives the heat pump installer the numbers they need.
What if you cannot afford the balance?
Warm Homes: Local Grant
Owner occupiers on a low income (household income under £36,000, or on means-tested benefits, or living in a deprived postcode area) in an EPC D to G home can apply to their council for the Warm Homes: Local Grant, which runs to 31 March 2028. It funds insulation, ventilation, solar and heat pumps, up to £15,000 for energy performance measures and £15,000 for low carbon heat per home (raised to £16,600 each in the July 2026 guidance, averaged across a council's project). In London it runs through Warmer Homes London, the GLA consortium of 31 boroughs. The council appoints the installer, so you cannot choose one. The insulation grants guide covers the rules in detail.
Warm Homes Fund loans
The Warm Homes Plan includes a planned Warm Homes Fund of roughly £5bn in low or zero interest loans for homeowners who do not qualify for grants. The loan terms were consulted on in 2026 and the fund is expected to open during 2027. If a heat pump is on your list but the balance after the £7,500 is the problem, that is the scheme to watch. See the Warm Homes Plan explained.
To find out what a heat pump would cost in your home after the grant, book a free heat loss survey or get a free quote.
Frequently asked questions
How much is the heat pump grant in 2026?
£7,500 through the Boiler Upgrade Scheme for an air source or ground source heat pump in England and Wales. Homes heated by oil or LPG with no mains gas get £9,000 between 21 July 2026 and 31 March 2027.
Do I apply for the Boiler Upgrade Scheme myself?
No. The MCS certified installer who fits the heat pump applies and deducts the grant from your quote. You are asked to confirm that you agree to the application, and you pay only the balance.
Do I need insulation before I can get the grant?
No. The requirement for loft and cavity wall insulation was removed in 2024. Insulation is still worth doing first because it lets the installer fit a smaller heat pump and smaller radiators, and cuts the running cost.
Is there VAT on a heat pump installation?
Not until 31 March 2027. Air and ground source heat pumps are energy-saving materials under HMRC VAT Notice 708/6, so the installation is 0% VAT. After that date the rate is due to become 5%.
What does a heat pump cost after the £7,500 grant?
A typical 3 bed home costs £8,000 to £15,000 before the grant, so £500 to £7,500 after it. Larger homes at £12,000 to £20,000 pay £4,500 to £12,500. These are indicative ranges; the price depends on the heat loss survey.
Can I get a heat pump for free?
Possibly, if you are an owner occupier on a low income in an EPC D to G home and your council funds a heat pump through the Warm Homes: Local Grant. The council chooses the installer. For everyone else the £7,500 grant and 0% VAT are the support, with low interest Warm Homes Fund loans expected in 2027.