BUS grant explained

The Boiler Upgrade Scheme (BUS) is a government grant that takes a significant chunk off the cost of installing a heat pump. It’s one of the biggest financial incentives available for home energy upgrades, and it’s simpler to access than you might expect.

How much is the grant?

The current grant amounts are:

• £7,500 towards an air source heat pump (including exhaust air heat pumps)
• £7,500 towards a ground source heat pump
• £5,000 towards a biomass boiler (rural, off-gas-grid properties only)
• £2,500 towards an air-to-air heat pump

These figures were increased from £5,000 and £6,000 respectively for air and ground source in late 2023. The scheme was expanded further in late 2025 to include air-to-air heat pumps and, once standards are finalised, heat batteries. For most homes considering a traditional air source heat pump, the £7,500 grant covers roughly half the total installation cost.

Who qualifies?

The eligibility criteria are relatively straightforward:

• Your property must be in England or Wales (Scotland has its own scheme, covered below)
• You need a valid Energy Performance Certificate (EPC) for the property. It doesn’t need to be a particular rating, it just needs to exist and be current (less than 10 years old). The government has signalled that this requirement will be relaxed during 2026/27, allowing alternative evidence where an EPC doesn’t exist
• The previous requirement to address any loft or cavity wall insulation recommendations on your EPC has been removed
• The property must not already have a heat pump installed
• The installation must be carried out by an MCS-certified installer
• The property can be a house, flat, bungalow or even certain non-domestic buildings

There’s no means testing. It doesn’t matter what you earn or how much your property is worth. The grant is available to homeowners, landlords (for rented properties) and social housing providers.

What it actually costs

A typical air source heat pump installation in the UK runs between £8,000 and £15,000 before the grant. The average is around £12,500 for an 8kW system. The variation depends on the size of the system, the complexity of the installation, whether you need new radiators or a hot water cylinder and regional labour costs.

With the £7,500 grant, your out-of-pocket cost drops to somewhere between £500 and £7,500. A straightforward installation in a well-insulated home with existing radiators that are suitable could land at the lower end. A larger home needing radiator upgrades, a new cylinder and pipework modifications will be at the higher end. Octopus Energy Services offers installations from around £3,500 to £4,500 after the grant for typical homes, which is competitive with the market average.

Ground source heat pumps cost more to install (typically £15,000 to £35,000 before the grant) due to the ground works involved, so the £7,500 covers a smaller proportion.

It’s also worth noting that heat pump installations currently carry 0% VAT, a relief that applies until at least March 2027.

How to apply

You don’t apply for the grant yourself. Your installer does it on your behalf. The process works like this:

1. Get quotes: Contact MCS-certified heat pump installers and get at least two or three quotes. They’ll assess your property, recommend a system size and provide a detailed quotation.

2. Choose an installer: Once you’ve picked an installer, they submit a voucher application to Ofgem (who administer the scheme).

3. Voucher issued: Ofgem reviews the application and issues a voucher. This typically takes 1 to 3 weeks, though it can be longer during busy periods.

4. Installation: Once the voucher is issued, the installation goes ahead. The voucher is valid for 3 months (with a possible 3-month extension).

5. Grant payment: After installation, the installer submits evidence of completion to Ofgem. The grant is paid directly to the installer, who deducts it from your final bill. You never see the grant money yourself.

From your perspective, you agree a total price with the installer, the grant gets subtracted, and you pay the balance.

Common reasons for rejection

Most applications go through without issues, but rejections do happen:

• No valid EPC: If you don’t have one, get an EPC assessment done first. An assessor can usually visit within a week or two and costs £60-100.
• Property already has a heat pump: The scheme is for new installations only. Replacing an existing heat pump doesn’t qualify.
• Installer not MCS-certified: The installer must hold current MCS certification for the type of heat pump being installed. Always verify before committing.
• Incomplete application: Missing documentation or technical information. This is the installer’s responsibility, but it helps to provide everything they ask for promptly.

Should you wait or act now?

The scheme is currently funded until March 2028. There’s no guarantee it will be extended beyond that, though the government has signalled ongoing commitment to heat pump deployment.

There are a couple of reasons not to wait too long. First, installer capacity is still building in the UK. As demand grows, lead times for installation may increase. Second, you start saving on energy bills from the day the heat pump is installed. Every month you delay is a month of potential savings missed.

That said, if your current boiler is working fine and you’re planning other home improvements (insulation, for example), it can make sense to sequence things. Improving insulation first means you can install a smaller, cheaper heat pump.

Scotland’s equivalent

Scotland doesn’t participate in the BUS scheme. Instead, Home Energy Scotland offers:

• A grant of up to £7,500 towards a heat pump (air source or ground source)
• A rural uplift to £9,000 for homes in remote rural or island areas
• An optional interest-free loan of up to £7,500 on top of the grant

The Scottish scheme has slightly different eligibility criteria and is administered through Home Energy Scotland advisors. The property must be your primary residence, and the heat pump must provide 100% of your heating and hot water. The process involves a home energy assessment before applying.

Combining with Octopus

Getting the grant and switching to Octopus Cosy is the combination that makes heat pumps a genuinely compelling financial proposition. The grant reduces the upfront cost; the tariff reduces the ongoing cost. For a typical home, the payback period against a gas boiler (factoring in the grant) can be as short as 5 to 8 years, shorter still if gas prices rise.

See the running costs on Cosy page for detailed numbers on what to expect once your system is up and running.