Government grants for heat pumps: Everything you need to know

If you're contemplating the switch to a heat pump system, you're on the right track to making your home more energy-efficient and eco-friendly.

In this comprehensive guide, we'll provide you with all the essential information you need to understand what government grants are available to you right now and how to apply for them.

Read on to discover how government grants can make your home more comfortable, sustainable, and budget-friendly.

What heat pump grants are available in the UK?

In the UK, heat pump funding is available through the following grants:

• Boiler Upgrade Scheme
• Energy Company Obligation Scheme (ECO4)
• Warmer Homes Scotland
• Home Energy Scotland Scheme
• Nest Scheme, Wales

The Warmer Homes Scotland and Nest Scheme actually offer homeowners in Scotland and Wales the chance to get a free heat pump if they meet the eligibility criteria.

It's also possible to save up to £750 on gas pump installation costs. Pay 0% VAT on clean energy technologies for 5 years (starting 23rd March 2022) on top of your chosen government grant.

Boiler Upgrade Scheme

The Boiler Upgrade Scheme (BUS) is a government initiative to encourage more people in England and Wales to install low-carbon heating systems, such as heat pumps and biomass boilers (boilers that burn natural materials such as wood pellets, chips or logs), to reduce their carbon footprint.

Please note the grant will only cover biomass boilers in rural locations, in homes that are not connected to the gas grid, and with an emissions certificate showing that polluting emissions are kept to a minimum.

The Boiler Upgrade Scheme was launched in April 2022 and will be in effect till 2028.

Who's eligible for the Boiler Upgrade Scheme?

To be eligible, you'll need to:

• Own your property (this can be a home or a small business property) in England or Wales.
• Have a valid Energy Performance Certificate (EPC) with no outstanding loft or cavity wall insulation recommendations. (There are some exceptions to this, please speak to your installer for further information.)
• Be replacing fossil fuel heating systems (oil, direct electric, or gas boiler), not an existing low-carbon heating system.

How much funding is available for the Boiler Upgrade Scheme?

From Monday, 23rd October 2023, the amount increased to a maximum of £7,500 per household. It was previously a maximum of £5,000 for air source heat pumps and £6,000 for ground source heat pumps. Biomass boiler grants will remain at £5,000.

Energy Company Obligation Scheme (ECO4)

ECO4 is the fourth wave of the Energy Company Obligation Scheme. It replaced ECO3 on 27th July 2022 and runs until 31 March 2026. ECO4 is different to previous waves as it focuses on improving the least energy-efficient homes.

It covers boiler repairs, insulation, and replacing inefficient heating systems with low-carbon heating systems.

Who's eligible for ECO4?

To be eligible, you'll need to:

• Own a property with an EPC band of D-G.
• Live in the home you own or rent privately.
• Be in receipt of government benefits (e.g. child tax credit, income-based jobseekers allowance, housing benefit).

If you're not receiving government benefits but are still considered low-income (under £31,000 per household) or have a long-term health condition, you could still be eligible under the ECO4 LA Flex scheme.

How much funding is available for ECO4?

Funding is available to cover all the costs of energy efficiency measures, so it shouldn't cost you a thing. The extent of the home improvements you'll receive depends on your household needs and energy supplier.

Warmer Homes Scotland

The Scottish government's Warmer Homes Scotland initiative offers funding and support to households struggling to keep on top of their energy bills and stay warm.

You can access the programme by contacting Home Energy Scotland, who will check what support is available. If your household is eligible, they'll then make a referral to the organisation Warmworks to carry out an assessment of your home. During this assessment, they will check what energy-saving home improvements are right for your home.

Who's eligible for Warmer Homes Scotland?

To be eligible, you'll need to:

• Live in a home you own or privately rent that is less than 230 square metres, where the council tax band is A-F and has a poor energy rating (determined during your assessment).
• Have lived there for at least at least six months (unless in receipt of an SR1, a DS1500 or a BASRiS form).
• Live in a home that meets the tolerable living standard set out in the Housing (Scotland) Act 2006 or, where the home does not meet the tolerable living standard, it will not impact the effectiveness of the recommended improvements for installation under the programme.
• Live in a home that includes either a person who is over 75 with no central heating, a person who is in receipt of a DS1500 or BASRiS certificate completed by a medical professional, or a person who is in receipt of at least one of the passport benefits.

How much funding is available for Warmer Homes Scotland?

The Scottish government will cover all costs in most cases. Most eligible homes will receive at least £10,000 worth of support through the scheme.

Home Energy Scotland Scheme

Home Energy Scotland is another scheme by the Scottish government (of which Warmer Homes Scotland is actually a part of) aiming to end fuel poverty in the country.

Homeowners in Scotland can apply for a standalone grant from the Home Energy Scotland Scheme to install air source or ground source heat pumps. There is an extra amount available for homeowners in rural areas.

Previously, applicants were required to sign up for a loan before they qualified for this funding, but they can now access the money directly. You can still opt for an interest-free loan of up to £7,500 to cover the remainder of the cost.

Who's eligible for the Home Energy Scotland Scheme?

To be eligible, you need to:

• Own the property you live in.
• Only use the grant/loan for one whole-house heating system.

To be eligible for the rural uplift portion of the scheme, you need to be living in a Remote Rural and Island area or an off-gas Accessible Rural area, as defined by the Urban Rural Classification. Home Energy Scotland advisors will be able to tell you whether your property is eligible for this uplift. The application form will assess this based on your postcode.

How much funding is available for the Home Energy Scotland Scheme?

Homeowners can receive up to £7,500 to install heat pumps. There is also the possibility of an extra £1,500 for homeowners in rural areas, where it may be more expensive to install home improvements.

A standalone grant of £7,500 for energy efficiency improvements to homes is also available.

Nest Scheme, Wales

The Nest Scheme offers Welsh residents a range of free, impartial advice and, if you are eligible, a package of free home energy efficiency improvements such as a new boiler, central heating, insulation, solar panels or a heat pump.

Nest advisors can offer advice on:

• Saving energy and water.
• Money management.
• Making sure you’re on the best energy and water tariff.
• Whether you are entitled to any benefits to boost your income.

Who's eligible for the Nest Scheme?

To be eligible, you have to:

• Own or privately rent your home (not from a local authority or housing association).
• Have an energy inefficient home that is expensive to heat.
• Receive a means tested benefit OR have a chronic respiratory, circulatory or mental health condition and an income below the defined thresholds.

How much funding is available for the Nest Scheme?

All costs towards your heat pump could be covered by the Nest scheme if you’re eligible. Depending on eligibility, Nest may offer you a new boiler, central heating, solar panels or insulation to help your home's energy efficiency.

How to apply for heat pump grants

How you apply for a heat pump grant depends on which one you're going to apply for. Here are the starting points for each scheme's application:

• Boiler Upgrade Scheme: Get a quote from an installer**
• ECO4: Complete this online application form
• Warmer Homes Scotland: Contact an advisor over the phone or via an online form
• Home Energy Scotland: Complete this online self-assessment form
• Nest Scheme, Wales: Call an advisor or request a call back

** Instead of applying for the Boiler Upgrade Scheme first-hand, you'll need to contact a suitable MCS certified installer to get quotes for the work. The installer will confirm you're eligible for an upgrade and apply on your behalf on the Ofgem website. The value of the grant will then be taken off the amount you pay for installation.

Find more ways to reduce your energy bills and carbon footprint with BOXT

Having a heat pump installed isn't the only way you can cut back on your energy bills and reduce your carbon footprint.

It can be as simple as investing in rooftop solar panels - which can also be done using a government grant - or adding external wall insulation and double glazing.

With BOXT, you can spread the cost of a new boiler over 1, 2, 3, 5 or 10 years with our flexible repayment plans. Better still, 1- and 2-year finance options are interest-free*.

Get a quote for an energy-efficient boiler from BOXT or for a solar panel system to start saving money and reducing your carbon emissions today.

*BOXT Limited acts as a credit broker and is not a lender. Any credit is subject to status, affordability and a credit check. Our finance platform is Divido and our lender is Novuna Consumer Finance. See our cancellation policy in full.