Heat Pump Grant & Cost UK 2026: BUS £7,500 Explained
Everything you need to know about the Boiler Upgrade Scheme grant, typical install costs, running costs vs gas and how to find the best heat-pump tariff - updated June 2026.
The £7,500 Boiler Upgrade Scheme grant
The Boiler Upgrade Scheme (BUS) is a UK Government grant for England and Wales that pays £7,500 directly to your MCS-certified installer when you replace a fossil-fuel heating system with an air source heat pump (ASHP). The grant is deducted from your final invoice - you never handle the money yourself.
Eligibility is straightforward. Your property must be in England or Wales, have a valid EPC with no outstanding recommendation to insulate loft or cavity walls (or have those works already done), and the installer must hold a current MCS certificate for heat pumps. Ground source heat pumps attract an even higher grant of £7,500 (same level since April 2022 uplift). The scheme has no income cap - it is open to homeowners of all income levels.
The BUS replaced the older Renewable Heat Incentive and is currently funded through to March 2028, so there is no urgent rush - but grant budgets can be reviewed by government, so acting sooner rather than later is sensible.
Heat pump install costs in 2026
Typical air source heat pump installation costs in 2026 range from £8,000 to £14,000, depending on the size of your home, the output rating of the unit, whether you need a new hot-water cylinder, underfloor heating or upgraded radiators, and your location. After the £7,500 BUS grant, most homeowners pay £500 to £6,500 out of pocket.
| Scenario | Install cost (before grant) | BUS grant | Net cost to you |
|---|---|---|---|
| Small home (2-bed, 5kW unit) | ~£8,000 | £7,500 | ~£500 |
| Mid-size home (3-bed, 8kW unit) | ~£11,000 | £7,500 | ~£3,500 |
| Larger home (4-bed, 12kW unit) | ~£14,000 | £7,500 | ~£6,500 |
Costs are indicative averages for June 2026. Always get at least three quotes from MCS-certified installers.
Heat pump running costs vs a gas boiler
A heat pump does not burn fuel - it moves heat from the outdoor air into your home, achieving 300-400% efficiency (a Seasonal Coefficient of Performance, or SCOP, of 3.5-4.0). For every 1 kWh of electricity used, you get 3.5-4 kWh of warmth. A modern gas boiler, by contrast, achieves around 90% efficiency.
Running costs therefore depend on the ratio between your electricity and gas unit prices. On the standard Ofgem cap rates (electricity 26.11p/kWh, gas 7.33p/kWh), the simple unit-price ratio is about 3.6:1, which roughly matches a SCOP of 3.6 - meaning running costs are broadly similar to gas at those capped rates. However, a specialist heat-pump or off-peak electricity tariff can push your effective electricity cost well below the cap rate during off-peak hours (nights and weekends), shifting the economics firmly in the heat pump's favour.
Gas boiler
~90% efficiency. Rising gas prices (cap +24% from July 2026) push annual bills higher. No government grant for new installs.
Air source heat pump
300-400% efficiency (SCOP 3.5-4.0). On a heat-pump tariff with cheap off-peak electricity, annual running costs can beat a gas boiler.
Key variable: your tariff
Off-peak electricity rates of 7-15p/kWh (vs the 26p cap rate) can halve your effective running cost. Use our form below to compare tariffs.
Find the best heat-pump electricity tariff
Because heat pumps run mainly on electricity, the right energy tariff is just as important as the hardware. Specialist heat-pump tariffs - such as those offered by Octopus Energy, OVO and EDF - provide cheaper off-peak electricity rates that align with when your heat pump runs hardest (overnight and during low-demand periods).
Enter your details below and we will compare available tariffs on your behalf, including options designed for heat-pump households.
Find a cheap heat-pump electricity tariff
Compare energy deals, including specialist off-peak tariffs designed for heat pump households. Takes under 2 minutes.
How the July 2026 Ofgem cap rise affects heat-pump economics
the Ofgem price cap is £1,663/yr for a typical dual-fuel household (up from £1,641/yr currently. The headline breakdown from 1 July is:
- Gas: 7.33p/kWh unit rate, 29.04p/day standing charge - gas is up approximately 24%
- Electricity: 26.11p/kWh unit rate, 57.19p/day standing charge - electricity is up approximately 5%
This asymmetric rise is good news for heat-pump owners. Gas is becoming proportionally much more expensive, while electricity (your heat pump's fuel) rises only modestly. Homeowners who installed a heat pump before July 2026 will see the economics of their decision improve automatically as gas bills for neighbours rise sharply.
If you are still on a gas boiler and weighing up whether to switch, the July 2026 gas rise makes the BUS grant case stronger than it was six months ago. The cost-saving case for heat pumps over the next decade looks compelling given the direction of gas prices.
MCS certification and finding a qualified installer
To claim the BUS grant, your heat pump must be installed by an MCS-certified (Microgeneration Certification Scheme) contractor. MCS sets installation standards and accredits the installers and products used. Only work carried out by an MCS-certified company qualifies for the grant - a quote from an uncertified installer is not eligible, however good value it looks.
When comparing quotes, check:
- The installer holds a current MCS Heat Pump certificate (searchable at mcscertified.com)
- The heat pump unit itself is MCS-listed
- The quote includes a heat-loss survey of your home (a legal requirement for sizing the system correctly)
- Any required radiator upgrades or cylinder replacement are included or quoted separately
- The installer will handle the BUS grant application on your behalf
Always get at least three quotes. Prices vary significantly between installers and regions.
How to apply: step-by-step
- Check your EPC. Get your current EPC from the government register. If it flags outstanding loft or cavity wall insulation, address those first (or get them quoted alongside the heat pump).
- Get MCS-certified quotes. Contact at least three MCS-certified heat pump installers. Use the form below or the MCS installer finder. Ensure quotes include the heat-loss survey.
- Choose your installer. Compare total installed cost, the unit brand and warranty, after-sales service, and timeline.
- Installer applies for the grant. Your chosen installer registers the voucher with Ofgem before installation. The £7,500 is deducted from your final invoice - you do not claim it separately.
- Installation day. A typical ASHP installation takes 1-3 days. The system will be commissioned and tested before the installer leaves.
- Switch to a heat-pump tariff. Once installed, compare electricity tariffs to find one with cheap off-peak rates (use our comparison tool above). Octopus, OVO and EDF all offer heat-pump-friendly options.
- Register for any smart controls. Some tariffs (like Octopus Cosy) require a compatible smart meter. Ensure you have one arranged.
Frequently asked questions
Does the £7,500 BUS grant cover all the cost of a heat pump?
For smaller properties, yes - a basic ASHP installation can cost as little as £8,000, so the £7,500 grant covers nearly all of it, leaving just ~£500 to pay. Larger homes with higher-capacity units and more pipework will still have a net cost of £3,000-£6,500 after the grant.
Is a heat pump cheaper to run than a gas boiler?
It depends on your electricity tariff. On the standard Ofgem cap rate (26.11p/kWh electricity vs 7.33p/kWh gas from July 2026), running costs are broadly comparable when the heat pump achieves a SCOP around 3.6. On a specialist off-peak heat-pump tariff with rates below 15p/kWh, a heat pump can be significantly cheaper than gas.
Do I need to insulate my home before getting a heat pump?
Heat pumps work best in well-insulated homes, but they do not require perfection. Your EPC must show no outstanding recommendation for loft or cavity wall insulation that has not been acted on. Good insulation also means a smaller, cheaper heat pump unit and lower running costs.
What is MCS certification and why does it matter?
MCS (Microgeneration Certification Scheme) accredits renewable energy installers and products to ensure quality standards. Only MCS-certified installations qualify for the BUS grant. Always verify your installer's MCS certificate before signing a contract.
Which energy suppliers offer heat-pump tariffs in 2026?
Reputable suppliers with heat-pump-friendly tariffs include Octopus Energy (Cosy-style off-peak plans), OVO Energy, and EDF. These provide cheaper off-peak rates overnight, which suits the way heat pumps typically run. Compare using our tariff tool above.
How does the July 2026 Ofgem cap rise affect heat-pump running costs?
Gas prices under the cap rise approximately 24%, while electricity rises only around 5%. This gap means heat pumps become relatively cheaper to run vs a gas boiler from July onwards. If you are comparing the two systems now, factor in this widening difference.
Can I get a heat pump in a flat or rented property?
Air source heat pumps are best suited to houses with outdoor space for the unit (garden, driveway or side access). Flats and high-rise buildings face practical challenges. Landlords can apply for the BUS grant, but must obtain any necessary planning permissions and ensure the EPC criteria are met.
How long does a heat pump last?
A well-maintained air source heat pump typically lasts 15-20 years, compared with 10-15 years for a gas boiler. Most manufacturers offer 5-7 year warranties, with some extending to 10 years. Annual servicing by an MCS-certified engineer keeps the unit running efficiently.
Get heat pump installation quotes
Compare free, no-obligation quotes from vetted MCS-certified heat pump installers. The £7,500 BUS grant will be applied to your invoice by your chosen installer.
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