Heat Pump Grants 2026: BUS, 0% VAT and the Warm Homes Loan

Boiler Upgrade Scheme: £7,500 — No Income Test

• Air source and ground source heat pumps qualify for £7,500
• No income test — every homeowner in England and Wales is eligible
• Off-gas homes on oil or LPG get a £9,000 uplift from 21 July 2026 to 31 March 2027

You don't need to be on a low income to claim the Boiler Upgrade Scheme (BUS). The grant is paid directly to your installer and deducted from your invoice at source — you never handle the paperwork or wait for a rebate.

0% VAT — Until 31 March 2027

Heat pumps (along with solar, batteries, insulation and controls) currently attract 0% VAT. On 31 March 2027 the rate rises to 5% — a reduced rate, but no longer zero. On a £12,000 installation that's the difference between paying £0 and £600 in VAT, which is another strong reason to move this year.

Warm Homes Loan Scheme: 0-3%, expected 2026

• Air source heat pump loans up to £20,000
• Ground source heat pump loans up to £35,000
• Rates of 0-3% with no income thresholds
• Public launch expected in 2026 but not yet open as of October 2026; a Consumer Loan Scheme follows in April 2027

The Warm Homes Loan (WHLS) is a planned national low-interest loan for home energy upgrades - the public application window is not open yet (as of October 2026). With no income thresholds, most homeowners can borrow at the bottom of the range and spread the cost over up to ten years.

Worked Example: A £12,000 Install

Say your air source heat pump quote is £12,000 all-in. The BUS grant of £7,500 is deducted at source, leaving £4,500 to pay. Fund that through the Warm Homes Loan (once open) at roughly 0-3% and the repayment works out at about £55 a month over ten years — often less than the typical annual saving on your heating bills.

MCS Certification — and Why Timing Matters

To claim the BUS your installer must be MCS certified and the grant must be applied for before work starts. Accredited installers' diaries fill up quickly ahead of the 31 March 2027 deadline, so book your survey early. Acting before that date lets you stack the £7,500 (or £9,000) grant, the 0% VAT rate and the lowest Warm Homes Loan rates in one project.