UK households can get £7,500 off the cost of a heat pump helping thousands benefit from cheaper energy bills.

The government has today announced a £30 million cash injection to the Boiler Upgrade Scheme which will make it easier for people to install a heat pump.

Heat pumps are currently much more expensive to buy and install than a conventional boiler but they can save households hundreds of pounds a year compared to a gas boiler.

They work by capturing heat from the air, ground or water and then passing this through a heat exchanger, where energy is then transferred to the water that flows through your radiators or underfloor heating, and to the water stored in hot water cylinders.

The measures form part of a “warm homes plan” announced by the Department for Energy Security and Net Zero (DESNZ) for installing clean heating tech and insulating more homes across the country.

As well as giving households £7,500 off the cost of a heat pump, the government has said it will change planning rules that require heat pumps to be at least one metre from the property boundary in a bid to encourage more people to have them installed.

Heat pumps that are used effectively with a smart “time of use” electricity tariff could save around £100 a year compared to a gas boiler, while better insulation could slash bills by around £200 a year.

The government has said there will be around £3.2 billion in funding for warmer homes in 2025/26, which will help around 300,000 UK households.

Minister for energy consumers Miatta Fahnbulleh said: “The idea at the heart of our Warm Homes Plan is a simple one – all families deserve the security of a home they can afford to heat.

“But for too long, that has been out of reach for far too many people who have been left with draughty homes and sky-high bills. That is why we are taking immediate action today to make cleaner heating available to more households.”

The government has also announced a “reformed” clean heat market mechanism, requiring 6% of sales by boiler manufacturers to be heat pumps or for them to pay a charge for each missed installation. Officials said there would be government support for every heat pump installation that is required under the mechanism in 2025/2026.

The government’s Boiler Upgrade Scheme offers grants for:

• £7,500 towards an air source heat pump
• £7,500 towards a ground source heat pump (including water source heat pumps and those on shared ground loops)
• £5,000 towards a biomass boiler

You will be eligible for a grant if you own the property you’re applying for (including if it’s a business, a second home, or a property you rent out to tenants) AND you are replacing fossil fuel heating systems, such as oil, gas, electric or LPG (liquefied petroleum gas).

You will still be eligible if you’ve already had funding to make your property more energy efficient, such as by insulating it.

You can apply for one of the grants by contacting a MCS certified installer to get a quote and they will tell you if you are eligible. The installer will then apply for the grant on your behalf on the Ofgem website and the value will then be deducted from the amount you pay for the installation.

Ofgem will then contact you to confirm that the installer is acting on your behalf and may also visit your property to check the installation.