As the UK pushes towards net zero emissions, government grants and funding schemes are making it easier for homeowners and businesses to install energy-efficient heat pumps. In 2025, several programmes continue to offer substantial financial support. Here’s a thorough review of what heat pump grants and funding schemes are available for UK homes and businesses this year.
On this page
| Scheme | Who it is for | Funding available | Location |
|---|---|---|---|
| Boiler Upgrade Scheme (BUS) | Homeowners, landlords, small businesses | £7,500 grant for heat pumps | England, Wales |
| Home Energy Scotland | Homeowners, landlords | £7,500 grant + loans | Scotland |
| Nest scheme | Low-income households | Full funding for eligible applicants | Wales |
| Warmer Homes Scotland | Low-income households | Full or partial funding | Scotland |
| VAT relief | Homeowners | 0% VAT on installation costs | UK-wide |
Boiler upgrade scheme (BUS)
The Boiler Upgrade Scheme remains the main government-backed incentive for heat pump installations in England and Wales.
- Eligibility: Available for homeowners, landlords, and small business owners.
- Funding available:
- £7,500 towards an air source heat pump
- £7,500 towards a ground source heat pump
- £5,000 towards a biomass boiler (in rural areas only)
- Key conditions:
- The property must have a valid Energy Performance Certificate (EPC) with no outstanding recommendations for loft or cavity wall insulation.
- The system must replace an existing fossil fuel heating system (oil, gas, LPG, or direct electric).
- Application process: Your heat pump installer applies for the grant on your behalf and deducts the value from your installation cost.
This scheme has been extended and increased for 2025, offering more generous support than in previous years.
Home Energy Scotland grant and loan scheme
For properties in Scotland, the Home Energy Scotland programme provides a combination of grants and interest-free loans.
- Eligibility: Homeowners and private landlords.
- Funding available:
- Up to £7,500 grant for heat pump installation
- An additional £1,500 rural uplift for those in remote locations
- Interest-free loans up to £7,500 to cover any remaining costs
- Key conditions:
- Applicants must use an approved installer.
- A home energy assessment may be required before applying.
Businesses in Scotland can access similar support through the Scottish Government’s SME Loan Scheme, offering loans up to £100,000 for renewable heat technologies.
Nest scheme (Wales)
In Wales, low-income households may qualify for full funding through the Nest scheme, which focuses on energy efficiency improvements.
- Eligibility:
- Must be receiving certain benefits, or
- Have a low income and a health condition made worse by a cold home.
- Funding available: Full funding for heat pump installation where appropriate, alongside insulation and other upgrades.
Nest is more focused on domestic properties and vulnerable groups, so it is not generally available for businesses.
Warmer Homes Scotland
Low-income households in Scotland may also qualify for full funding or significant discounts through the Warmer Homes Scotland programme.
- Eligibility: Based on income and health conditions.
- Funding available: Grants to cover the full cost of heat pumps, insulation, and other measures.
This scheme prioritises vulnerable households but is a key route for accessing a fully funded installation in Scotland.
Non-domestic Renewable Heat Incentive (legacy support)
While the original Non-domestic Renewable Heat Incentive (RHI) closed to new applicants in 2021, businesses that applied before closure still receive quarterly payments for 20 years after installation, based on metered heat output.
For businesses installing new heat pumps in 2025, there is currently no direct replacement RHI scheme, but future support programmes are expected to be launched under the UK’s Clean Heat Market Mechanism from 2026 onwards.
VAT relief for heat pump installations
In addition to grants, there are VAT savings to be made:
- Current VAT rate: 0% on the supply and installation of heat pumps for domestic properties (valid until March 2027).
- For businesses: Standard VAT rates apply, but businesses may be able to reclaim VAT through their tax returns if VAT registered.
This VAT relief can save thousands of pounds on a typical residential installation.
Potential future schemes
The UK government plans to roll out new funding initiatives to boost heat pump adoption in businesses through the Green Heat Network Fund and Industrial Energy Transformation Fund. However, these are primarily aimed at larger infrastructure projects rather than single building upgrades.
For SMEs, smaller dedicated support is being consulted on in 2025, with pilot schemes expected to be launched by late 2025 or early 2026.
Conclusion – Heat pump grants schemes
In 2025, there is generous support available for those looking to switch to heat pumps, whether you are a homeowner, landlord, or small business owner. The Boiler Upgrade Scheme remains the most widely accessible option, while specific programmes in Scotland and Wales provide additional opportunities for heat pump grants or full funding. Businesses should also watch for upcoming support tailored to commercial heat pump adoption.
Acting sooner rather than later is advisable, as funding schemes often have limited budgets and application windows.