The UK government has retained the boiler upgrade scheme (BUS) despite widespread speculation the heat pump subsidy program was set to be scrapped, although the total budget for the program has been cut by around GBP 700 million ($932 million).

BUS grants of up to GBP 9,000 have been offered to UK consumers in a bid to accelerate the electrification of home heating in a country where more than two thirds of households use a natural gas-fired heating system.

In the first Budget delivered by UK Chancellor John Healey, the government committed to maintaining the BUS grant at current funding levels of GBP 400 million in 2027-28, rising “broadly in line with inflation” thereafter. Previously, GBP 600 million was allocated for the 2027/28 financial year, GBP 683 million for 2028/29 and GBP 709 million for 2029/30.

Social housing tenants should also benefit from an additional GBP 100 million of funding, subject to final approvals, to support the delivery of up to 57,000 solar installations for households this financial year. Further grant support for residential solar, battery storage and heat pumps will continue to be available through the government’s Warm Homes Plan, which receive an additional GBP 335 million investment in 2027, however the multi-year program’s total budget is being cut by GBP 1 billion as a contribution to defense spending.

The Chancellor has made changes to value added tax (VAT) rules that will affect solar and battery storage. UK consumers currently pay no VAT on home solar and battery but this will rise to 5% from Apr.

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