Autumn Budget 2026: What It Means for Heat Pumps

Updated 28 October 2026, after the Budget. The Budget did not announce any change to the Boiler Upgrade Scheme.

The Autumn Budget 2026 was delivered on Wednesday 28 October, the first from the new Chancellor, John Healey. For anyone thinking about a heat pump, and for small local installers like us, one question mattered more than most: what would happen to the Boiler Upgrade Scheme?

Here’s what the Budget announced, what had been reported beforehand, and what it means for homeowners and the small firms that fit their heat pumps.

What the Autumn Budget 2026 announced

No change to the heat pump grant. The Boiler Upgrade Scheme isn’t mentioned in the Budget, so the £7,500 grant, and £9,000 for oil and LPG homes until 31 March 2027, continue. The energy department still has to set out how it will meet its defence savings, so we’ll keep watching.
0% VAT on energy-saving materials: no change announced. It’s still due to end on 31 March 2027.
VAT on household electricity: the cut is extended to July 2027, which the government expects to take around £50 off the price cap in April 2027.
Gas standing charges will be abolished from 2027, with the cost moved into the price per unit of gas. 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, and a planned new levy on gas bills to fund hydrogen has been scrapped.
A £100 Household Energy Payment from January 2027 for homes in England in council tax bands A to D.
Small business rates relief: 100% relief now applies up to a rateable value of £18,000, mainly helping shops, hospitality and leisure businesses.

Source: GOV.UK, Budget 2026.

What was already in place

Boiler Upgrade Scheme: £7,500 off an air source or ground source heat pump in England and Wales, or £9,000 if you’re replacing oil or LPG heating, until 31 March 2027.
0% VAT on heat pumps, solar panels, batteries and insulation, also until 31 March 2027.
VAT removed from household electricity bills from 1 October 2026. The Budget has now extended this to July 2027.

Demand is strong. According to Nesta, July and August 2026 were the two busiest months on record for Boiler Upgrade Scheme applications.

What had been reported

Before the Budget, in early October, the Guardian, the Telegraph and Bloomberg reported that the Department for Energy Security and Net Zero has been asked to find more than £2 billion of savings to help fund defence. The Boiler Upgrade Scheme, with a budget of around £2.7 billion, is one of the places ministers are reportedly looking.

The reports suggested the scheme would be cut rather than scrapped, possibly by hundreds of millions of pounds. The department told the Telegraph that “savings for the Defence Investment Plan are a small part of DESNZ’s overall budget”. In the end, the Budget did not announce any change to the scheme.

Why cuts hit small installers hardest

Small, local installers depend on steady, predictable demand. To fit heat pumps properly, a firm has to invest in MCS certification, training, design software, stock and skilled engineers, often months before the work comes in.

Large national companies can absorb a sudden drop in orders. A small team can’t as easily. When grant rules change at short notice, homeowners put plans on hold, and installers are left with booked staff and empty diaries.

We’ve seen this before. The Green Homes Grant opened in September 2020 and closed in March 2021, after many installers had taken on staff and training to deliver it. That kind of stop-start policy makes it harder for good local firms to grow and harder for homeowners to find one.

It also matters for quality. Heat pumps work well when they’re designed and installed properly. Our Ledbury case study shows what happens when they aren’t. Stable support lets skilled local installers stay in business and train the next generation, rather than leaving the market to whoever can scale up fastest when funding opens.

Why the grant matters

The government’s own evaluation of the scheme, as reported by Nesta, found that 74% of supported installations would not have happened without the grant, and that 42% of recipients had household incomes below £52,000.

Heat pumps are also getting cheaper to run as electricity prices come down relative to gas. Nesta says the ratio of electricity to gas prices fell from 4.7 in January to 3.3 in October 2026, and argues that support should be phased down gradually as running costs improve, not cut suddenly.

What it means if you’re thinking about a heat pump

The grant is unchanged for now. The Budget kept the £7,500 grant, and the £9,000 grant for oil and LPG homes runs until 31 March 2027, the same date that 0% VAT on heat pumps, solar panels and batteries is due to end.
Don’t rush into a poor installation. A good system starts with a proper survey and a room-by-room heat loss calculation. A cheap, rushed job can cost far more in the long run.
Get a survey booked. With both deadlines in March 2027, now is a good time to book a survey and quote, so you’re ready to apply. We handle the grant application for you.
Check the cost. Our guide to how much a heat pump costs shows typical prices before and after the grant.

If you live in Gloucestershire or the Cotswolds, read our guide: heat pump grant unchanged in the Budget: what it means for Gloucestershire homes.

For more on the grant timeline, read our earlier post: Heat pump grants under threat: why now is the time to act.

What we’d like to see

We welcome the decision to keep the grant in this Budget. What installers and homeowners need most now is certainty: a clear, long-term plan for heat pump support, with enough notice of any change for people to plan around it. That’s how you build a skilled local workforce and keep standards high.

We’ll keep this post updated if anything changes. If you have questions about your own project in the meantime, get in touch.

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Autumn Budget 2026: what it could mean for heat pumps and small installers