There are various funding schemes on offer for both commercial and domestic customers to help towards the cost of a new heat pump system.

For commercial installations:

Salix

Public sector or social housing installations may be eligible for one or more of the following Salix funded government grants. Salix is an established government partner for the delivery of these schemes:

• Public Sector Decarbonisation Scheme (PSDS)

Now in its third phase, the Public Sector Decarbonisation Scheme provides grants for public sector bodies to fund heat decarbonisation and energy efficiency measures. Its aim is to reduce fossil fuels, as well as making public buildings more comfortable and more efficient to heat.

• Low Carbon Skills Fund (LCSF)

Currently in Phase 4, the fund supports heat decarbonisation projects being delivered across the public sector.

• Home Upgrade Grant (HUG)

The Home Upgrade Grant provides energy efficiency upgrades and low carbon heating via local authority funding, to households in England that are low income, off the gas grid or have an Energy Performance Certificate (EPC) between D and G.

• Social Housing Decarbonisation Fund (SHDF)

SHDF is for local authorities, providers of social housing and charities who own social housing to bid for Government funding to install energy efficiency upgrades in housing stock that is currently below an EPC rating of C.

Green Heat Network Fund (GHNF)

The GHNF is open to applicants from organisations in the public, private and third sectors who are responsible for the development of heating and cooling networks in England. Its objectives include achieving carbon savings and decreases in carbon intensity of heat supplied and increasing the total amount of low carbon heat utilisation in new and retrofitted heat networks.

Local Authority Delivery (LAD)

LAD aims to raise the energy efficiency of low income and low energy performance homes with a focus on EPC ratings of E, F or G. It is allocated to local authorities to improve the energy efficiency of homes of low-income households, helping reduce fuel poverty, phasing out high carbon fossil fuel heating, and delivering progress towards the UK’s commitment to net zero by 2050.

Super Deduction for Capital Allowances

Commercial projects which do not qualify for the above funding may still be able to cut their tax bill when installing a heat pump using Super Deduction for Capital Allowances. From April 2023 until end March 2026, companies can claim 100% capital allowances on qualifying plant and machinery investments.

For domestic installations:

Boiler Upgrade Scheme

The main source of funding for domestic installations is the government’s Boiler Upgrade Scheme (BUS) – a one-off upfront payment for those looking to replace existing fossil fuelled (gas/oil) boiler or electric heating.

BUS provides a £7,500 grant upfront for homeowners looking to install an air or ground source heat pump installation.

A wide range of properties are eligible for BUS, including self-builds, as long as the new heat pump system doesn’t exceed 45kW (a medium sized home installation is usually 9kW). Applying is easy – installers such as Finn Geotherm simply submit the application for BUS vouchers on behalf of the consumer. The vouchers are valid for three months for air source or six months for ground source from the date of issue.

Landlords can also apply for BUS when installing heat pumps in their tenanted properties.

Home Upgrade Grant

The Home Upgrade Grant (HUG) is local authority funding for households in England to make homes more energy efficient through methods such as air source heat pumps and additional insulation. To quality, households must be low income, off the gas grid, have an Energy Performance Certificate (EPC) between D and G, and live in a qualifying local authority area. If you qualify for HUG, your heat pump project may be carried out at no cost to you.

Zero VAT

There is also currently zero VAT on energy-saving materials, which includes heat pumps. The changes, announced by the Chancellor in the 2022 Spring Budget, saw VAT abolished on items such as heat pumps, solar panels and insulation, from 1st April 2022 until 2027.