The UK government recently raised the Boiler Upgrade Scheme (BUS) budget. The scheme helps homeowners in upgrading from fossil-fuel boilers to low-carbon heating. For the 2025 to 2026 period, the BUS budget is set at £295 million. That is an enormous boost to encourage the installation of heat pumps.
This article describes what the money is for. It also explores how the BUS connects with the Free Boiler Scheme for low-income households. Also, we will talk about the new DESNZ proposals to improve the boiler upgrade scheme.
What Is the Boiler Upgrade Scheme?
The Boiler Upgrade Scheme (BUS) is a government-backed funding program for homeowners in England and Wales. It is to switch their outdated fossil-fuel boilers (oil or LPG) to low-carbon heating systems.
It is all part of the UK’s net-zero carbon target to achieve by 2050. Rather than replacing your current outdated boiler, the BUS promotes upgrading to:
- Air source heat pumps
- Ground source heat pumps
- Biomass boilers (in certain rural circumstances)
The intention is to reduce fossil fuels, lower emissions, and assist households in transitioning to cleaner heat.
2025–26 Boiler Upgrade Scheme Budget
In 2025–26, the Boiler Upgrade Scheme (BUS) is supported by a £295 million budget. This rise indicates that the government is keen to promote the UK’s move to low-carbon heat more quickly.
What the £295 Million Covers
Grant for air-source and ground-source heat pumps and biomass boilers: BUS provides a £7,500 discount for air-source and ground-source heat pump installations. In suitable rural or off-grid properties, £5,000 grants are set for biomass boilers.
Eligibility extension and new technologies: The scheme can be extended to air-to-air heat pumps with a DESNZ consultation. And grant amounts between £1,000 and £2,000.
Increased demand: With time, people realised that the maintenance of their fossil fuel boilers cost them a lot of money, and they started exploring their options. So, the news of the free boiler scheme spread fast. Thus, more UK households applied for and demanded their free boiler upgrades. And so, more grant funding is required.
Market expansion and installer capability: The budget supports training, manpower, and equipment costs in the green energy sector to meet expanding demand. And heat pumps are a leading part of it.
What About the ECO4 Free Boiler Scheme?
As you can see, the Boiler Upgrade Scheme helps with heat pumps, the ECO4 Free Boiler Scheme is all about replacing inefficient old gas or oil boilers for brand-new A-rated ones – especially for low-income and vulnerable households.
Key features:
- It is completely free of cost, so homes that qualify don’t spend a single penny.
- It assists in replacing boilers fitted before 2005 or non-condensing boilers.
- Also, it may include other enhancements, such as insulation or smart heating controls, too.
So while BUS and ECO4 are different, they share one goal: making UK homes warmer and cheaper to heat.
If you are still unsure which one suits you better, think of it this way:
- ECO4 Free Boiler Scheme → free A-rated gas boiler (for qualifying low-income households).
- Boiler Upgrade Scheme → grant for switching to renewable systems like heat pumps.
How Does This Compare to Previous Years?
Seeing how much the 2025–26 Boiler Upgrade Scheme budget is compared to previous years informs us more about how much the government is ramping up its support for low-carbon heat. Here are the important comparisons:
Previous Budgets and Grant Amounts
Since the BUS went live at some point in September 2022, one of the biggest grants offered was £5,000 off to fit heat pumps.
Grants increased with time. Specifically, the BUS grant for air-source and ground-source heat pumps increased to £7,500, keeping up with inflation and increasing costs.
Percentage of Heat Pump Types
Historically, there was speculation that ground-source heat pumps or biomass would be more in proportion. In reality, air-source heat pumps (ASHPs) have been the norm. To date, to 2024/25, roughly 97% of BUS orders are for ASHPs. This validates consumer choice and sheer practicality.
Who Is Eligible to Apply for the Boiler Upgrade Scheme?
To be eligible for the BUS grant for 2025–26, you must:
- Own the property (house or small shop).
- Replace a fossil-fuel heating system (such as oil or LPG).
- Hold a valid EPC (Energy Performance Certificate) with no outstanding insulation recommendations.
- Use an approved installer who is scheme-registered.
Tenants and leaseholders cannot make direct applications, although landlords can apply on their behalf.
What’s the Cost of Fitting a Heat Pump?
Even with a £7,500 grant, costs vary:
| System Type | Typical Cost (Before Grant) | Typical Cost (After Grant) |
| Air Source Heat Pump | £10,000–£13,000 | £2,500–£5,500 |
| Ground Source Heat Pump | £18,000–£25,000 | £10,000–£17,000 |
| Biomass Boiler | £12,000–£15,000 | £7,000–£10,000 |
These are approximate prices for 2025–26. Prices vary with the size of the property, the quality of insulation, and the installer hired.
ECO4: Ensuring Low-Income Families Don’t Go Cold
While the Boiler Upgrade Scheme encourages the use of renewable technology, most homes opt for gas boilers – and simply can’t afford to pay for pricey installations.
Join the ECO4 Free Boiler Scheme:
- If you receive certain qualifying benefits or live in a low EPC-rated property (D–G), you may qualify for a brand new A-rated condensing boiler at no cost at all.
- It will save you as much as £520 on your yearly bills and warm and make your home safer (as per energy usage assumptions).
- If you believe you might be eligible, check your eligibility today to see if you qualify for the free boiler scheme.
The Bottom Line
The budget for the Boiler Upgrade Scheme in 2025–26 is around £295m. That covers £7,500 grants on heat pumps and helps to expand the market. The scheme has been installing mainly air-source heat pumps so far (some 97% of total installs).
If you’re low-income, do not miss the ECO4 Free Boiler Scheme. That scheme offers a free boiler upgrade and other interventions for those eligible in the home, along with access to additional Free Boiler Grants designed to support energy-efficient heating improvements. Read More
