Budget 2026: what it means for heat pump, solar and battery installers

Despite weeks of press speculation, the Budget left the Boiler Upgrade Scheme unscathed. It wasn't the only good news. The day before, homeowners got a new way to pay for heat pumps, solar and batteries with the launch of the Warm Homes Loan Scheme.

There's also a date to note. 0% VAT on heat pump, solar and battery installs runs until 31 March 2027.

Here's the rundown, and what it means for your jobs.

The Boiler Upgrade Scheme stays

The government says it "remains committed to heat pump deployment" and will keep the Boiler Upgrade Scheme "at current funding levels of £400 million in 2027‑28 and rising broadly in line with inflation thereafter"¹. The Budget announced no change to grant levels.

The cut landed elsewhere. The Warm Homes Plan is giving up £1 billion of capital grant to the Defence Investment Plan. The government says most of the plan's funding for low-income households and social housing is protected.

0% VAT on installs runs until 31 March 2027

Since 2022, installing heat pumps, solar and batteries in homes has carried 0% VAT. That was always a temporary relief, and the Budget confirmed it ends as planned. From 1 April 2027, VAT on qualifying installs returns to 5%². The government also plans to add heat batteries to the list from the same date, once secondary legislation goes through Parliament³.

Until 31 March: For customers weighing up a heat pump this winter, the date is a real reason to decide now. Use it in your conversations through to February, with 31 March as the deadline. Plan your January to March capacity to match.

From 1 April: After the change, the question is how customers absorb the extra 5%. Finance turns it into a small difference in a monthly payment. Government-backed Warm Homes loans are now one option, covered below, and every Ample quote pack includes customer finance.

Running costs get a little better

Most of the Budget's energy news is about bills, which shape your customers' running-cost conversations.

• 0% VAT on household electricity is extended to 30 June 2027, three months longer than planned⁴.

• Gas standing charges will be scrapped by the end of 2027 or as soon as possible after. The fixed costs move onto the gas unit rate⁵. Electricity standing charges will be reformed, with details next year.

• No new policy costs on bills until a new Cost Control Framework is in place at the 2027 spending review⁶.

For customers who come off gas, the standing-charge saving shrinks, but a heat pump compares better per unit of heat.

The Warm Homes Loan Scheme is live

The government's Warm Homes Loan Scheme launched on 27 October⁷. Ten lenders offer lower-interest loans: up to £20,000 for an air-to-water heat pump, and up to £15,000 each for solar and batteries. Homeowners can combine a loan with a Boiler Upgrade Scheme grant. An MCS-certified installer must carry out every installation under the scheme.

From April, the scheme also helps customers absorb the 5% VAT by spreading it with the rest of the cost.

Join our Warm Homes Loan Scheme webinar

Sources

1. Budget 2026, para 4.36: Boiler Upgrade Scheme funding and the Warm Homes Plan saving

2. Overview of tax legislation and rates, 2.22: VAT on installs returns to 5%

3. Budget 2026, para 6.214: heat batteries to be added

4. Overview of tax legislation and rates, 2.20: 0% VAT on household electricity to 30 June 2027

5. Budget 2026, para 3.9: gas standing charges scrapped

6. Budget 2026, para 4.21: no new policy costs on bills

7. DESNZ: Warm Homes Loan Scheme factsheet: launch date, lenders and loan limits

8. Budget 2026, para 3.18: National Living Wage

9. OBR Economic and fiscal outlook, October 2026: Bank Rate forecast