Funding Schemes for Energy Efficiency Work: BUS, ECO4, GBIS and Local Authority Grants

Quick Answer: The Boiler Upgrade Scheme (BUS) offers £7,500 toward an air source heat pump or ground source heat pump, or £5,000 for a biomass boiler, paid directly to the MCS-certified installer. ECO4 provides free insulation and heating upgrades to fuel-poor households via energy supplier obligation. VAT on all energy efficiency products (insulation, heat pumps, solar) reduced to 0% from April 2022.

Summary

The UK government has operated a series of grant and subsidy schemes aimed at improving the energy efficiency of homes and reducing carbon emissions from domestic heating. The landscape of these schemes changes regularly — some are time-limited, some are ongoing, and some have been announced but not yet fully operational. This article covers the active schemes as of early 2026.

For tradespeople, understanding these schemes matters directly: they drive demand for insulation, heat pump, and solar work. Being MCS-certified or working for an MCS-registered company is a prerequisite for accessing the most generous grants. Advising clients correctly about what they are eligible for — and being clear about the application process and installer requirements — builds trust and can be a significant competitive differentiator.

The correct approach is always to be accurate about eligibility. Overpromising on grants and then failing to secure them for clients damages relationships and reputation. The schemes described here have specific eligibility criteria, and these must be assessed for each individual property and household before quoting.

Key Facts

• Boiler Upgrade Scheme (BUS) — £7,500 for air or ground source heat pumps; £5,000 for biomass boilers; replaces the domestic Renewable Heat Incentive; runs to March 2028 (current end date, may be extended)
• MCS certification — Microgeneration Certification Scheme; mandatory for the installer applying for BUS; the heat pump or biomass system must also be MCS-certified
• BUS application process — installer applies after installation is complete; voucher is issued by Ofgem to the installer who redeems it; grant is deducted from the customer's invoice
• ECO4 (Energy Company Obligation) — energy supplier obligation scheme; free insulation and heating improvements for low-income or fuel-poor households; funded by energy suppliers (passed to all customers via bills)
• ECO4 eligibility — household must meet an income threshold OR qualify via ECO Flex (LA referral); property must be EPC D, E, F, or G; typically requires owner-occupier or private tenant with landlord consent
• GBIS (Great British Insulation Scheme) — separate from ECO4; covers homes with EPC D or above that don't qualify for ECO4; two routes (means-tested and non-means-tested); funded through energy suppliers
• ECO4 fabric first — insulation improvements take priority over heating upgrades under ECO4; the scheme targets the fabric of the home before adding a heat pump
• 0% VAT on energy efficiency products — since 1 April 2022, insulation, solar panels, heat pumps, wind turbines, and other energy saving materials attract 0% VAT; installation labour is also 0% for qualifying products
• Green Homes Grant Vouchers — ended February 2022; no longer available; superseded by GBIS and BUS
• Warm Homes Plan — the government's proposed Warm Homes Plan (announced 2024, implementation from 2025 onward) aims to replace and expand existing schemes; specifics were still being developed as of early 2026
• Salix Finance — UKRI-funded body providing interest-free loans for energy efficiency in public buildings (schools, hospitals, local authority buildings); relevant for trades working in public sector
• Local Authority Delivery (LAD) — direct council grants for insulation and low-carbon heating; schemes vary by authority; some councils have active schemes funded by central government grants
• Home Upgrade Grant (HUG) — targeted at rural homes off the gas grid with low EPC ratings; administered by local authorities; applies to owner-occupiers
• SEAI (Ireland) — the equivalent body in the Republic of Ireland; separate schemes apply and are not covered here
• EPC rating — Energy Performance Certificate; key document for most schemes; properties must have an up-to-date EPC (within 10 years for most purposes; within 2 years for some schemes)

Quick Reference Table

Detailed Guidance

Boiler Upgrade Scheme (BUS)

The Boiler Upgrade Scheme replaced the Renewable Heat Incentive (RHI) when that scheme closed in March 2022. Where RHI paid a per-unit subsidy to the homeowner over 7 years based on heat generated, BUS is a straightforward capital grant paid upfront to the MCS installer.

What is covered:

• Air source heat pumps (ASHP): £7,500
• Ground source heat pumps (GSHP): £7,500
• Biomass boilers: £5,000

Who can apply:

• The MCS-certified installer applies on behalf of the customer
• The property must be in England, Scotland, or Wales
• The heating system must replace a fossil fuel heating system
• The property must not have a live application under any other government heat pump grant

Application process:

1. Installer registers with Ofgem's BUS portal
2. Customer agrees to the project; installer checks property eligibility
3. Installation is completed to MCS standards
4. Installer applies for the grant via Ofgem within 3 months of installation
5. Ofgem issues a voucher; installer deducts the grant from the customer's invoice or is reimbursed directly

MCS certification requirements: To install heat pumps under BUS, the installer must hold MCS certification for the relevant technology (MCS 007 for heat pumps). MCS certification requires the company to have qualified engineers (BPEC, City & Guilds or equivalent heat pump training), quality management procedures, and third-party audited installations.

Practical points for tradespeople:

• The BUS grant significantly improves the economics of heat pump installation for customers, reducing the effective cost of an ASHP installation from ~£12,000–£15,000 to ~£5,000–£8,000
• BUS cannot be combined with ECO4 funding on the same measure
• Biomass boilers must be pellet-burning (not log-burning) for the £5,000 grant; other biomass types (gasifiers, chip) are not currently eligible

ECO4 (Energy Company Obligation, Phase 4)

ECO4 (2022–2026) is the fourth phase of the Energy Company Obligation, requiring the UK's largest energy suppliers (British Gas, Octopus, E.ON, EDF, and others) to fund energy efficiency improvements in fuel-poor homes. The cost is passed on to all energy bill payers.

ECO4 priorities:

1. Wall insulation — external wall insulation (EWI), cavity wall insulation (CWI), internal wall insulation (IWI)
2. Loft insulation
3. Under-floor insulation
4. First-time central heating (replacing inefficient electric storage heaters or no central heating)
5. Low-carbon heating (heat pumps in limited circumstances)

ECO4 eligibility: Properties must be EPC D, E, F, or G. Households must qualify via:

• Qualifying benefit recipient (Universal Credit, Housing Benefit, Child Tax Credit, Working Tax Credit, Pension Credit, Income Support, income-based JSA/ESA)
• ECO Flex — local authority referral scheme; LAs can refer households that don't qualify on benefit grounds but are nonetheless in fuel poverty or on low incomes

Installer requirements: Installers must be PAS 2030:2019 certified (for installation) and work under a TrustMark-registered scheme provider for ECO4. This is a significant compliance burden — PAS 2030 certification requires audited quality management, qualified staff, and third-party inspections. Trades new to ECO4 work typically start by partnering with an existing PAS 2030-certified lead installer.

Typical ECO4 funded works:

• EWI: solid-wall homes (pre-1940s typically); cost £8,000–£25,000 fully funded
• Cavity wall insulation: post-1940s cavity wall homes; cost £1,500–£3,000 fully funded
• Loft insulation: cost £300–£1,000 fully funded
• First-time central heating: air source heat pump or gas boiler; cost £5,000–£15,000 fully funded

Great British Insulation Scheme (GBIS)

GBIS (previously called the Great British Insulation Scheme, launched October 2023) operates alongside ECO4 to extend insulation funding to a broader range of properties.

Key differences from ECO4:

• GBIS covers EPC D properties as well as E, F, G — capturing better-performing homes that still benefit from improved insulation
• Two eligibility routes:
  • Group A (means-tested): similar to ECO4 benefit-recipient criteria
  • Group B (non-means-tested): EPC D or below; no income check; includes council tax bands A–D in England
• GBIS is limited to a single measure per property (not a whole-house package like ECO4)
• Typical GBIS measure: loft insulation (primary focus); cavity wall insulation; some solid wall insulation

GBIS installer requirements mirror ECO4 — PAS 2030:2019 and TrustMark registration are required.

VAT 0% on Energy Efficiency Products

Since 1 April 2022, the installation of energy-saving materials (ESMs) in residential buildings attracts 0% VAT. This is a permanent change (not time-limited), applying to both the product and the installation labour when supplied together.

Qualifying products (selected):

• Insulation (cavity wall, loft, floor, solid wall — any type)
• Solar photovoltaic panels
• Solar water heating
• Wind turbines
• Heat pumps (air source, ground source, water source)
• Energy storage batteries (when installed alongside or connected to solar/wind)
• Heating controls and thermostatic radiator valves (when part of a qualifying installation)

What is NOT at 0% VAT:

• A heat pump installed without any connection to other ESMs (standalone heat pump on commercial building)
• Materials supplied without installation (supply-only is standard-rated at 20%)
• Boiler replacements (gas boilers are not ESMs)

For tradespeople, this means that heat pump and insulation installations on residential properties are invoiced at 0% VAT — a 20% saving on the job that should be passed to the customer (and often makes projects viable that would otherwise be marginal).

Salix Finance

Salix Finance provides interest-free government loans to public sector organisations for energy efficiency improvements. Schools, hospitals, local councils, and housing associations can borrow from Salix to fund:

• LED lighting upgrades
• Boiler replacements with efficient alternatives
• Insulation improvements
• Heat pumps and solar installations

Repayment comes from the resulting energy bill savings. For tradespeople working in public sector buildings, Salix-funded projects often provide a reliable pipeline of retrofit work without the eligibility uncertainties of household grant schemes.

Combining Schemes and the Fabric-First Principle

For domestic retrofit, the most cost-effective approach is the "fabric first" principle: improve the thermal performance of the building envelope (insulation, air sealing, glazing) before sizing and installing a heat pump. A poorly insulated home with a heat pump will have poor heat pump performance (low coefficient of performance), high running costs, and disappointed clients.

Recommended sequence:

1. Install loft insulation (cheapest, highest return)
2. Cavity wall or solid wall insulation
3. Double or triple glazing upgrade if still single-glazed
4. Then install a correctly sized heat pump

ECO4 enforces this through its fabric-first rules — a heat pump can only be funded under ECO4 where the fabric measures have already been carried out or are being carried out simultaneously. Under BUS, there is no fabric-first requirement, but the MCS installer is obliged to advise the customer appropriately.

Frequently Asked Questions

Can a landlord access ECO4 funding for a rental property?

Yes — private landlords can access ECO4 funding for rental properties if the tenant meets the eligibility criteria (benefit recipient or LA referral via ECO Flex). The landlord's consent is required before work proceeds. In some ECO4 contracts, landlords are required to contribute a portion of the cost — the contribution requirement varies by scheme provider and property EPC rating.

Does BUS require the property to have a specific EPC rating?

BUS does not have an EPC rating requirement for the property itself, but all properties must have a current EPC. The installer must carry out a heat loss calculation (to PAS 2035 standards) and size the heat pump correctly. Properties with very high heat losses may require additional insulation before a heat pump can be properly sized.

What is TrustMark, and why does it matter for ECO4?

TrustMark is a government-endorsed quality scheme for tradespeople working in and around homes. For ECO4 and GBIS work, the government mandates that all funded work is carried out by TrustMark-registered businesses. TrustMark provides a quality-assurance framework and a complaints resolution process. Trades not registered with TrustMark cannot legally carry out ECO-funded work.

My client wants a heat pump but doesn't qualify for BUS — what are the options?

Without BUS, the customer pays the full installation cost. Some local authorities have their own grant schemes (Home Upgrade Grant, Local Energy Improvement Scheme) — check with the local council. The customer may be eligible for 0% VAT on the installation (automatic, no application needed). Some energy suppliers offer their own heat pump incentives — check with the relevant supplier.

Has the Green Homes Grant been extended?

No — the Green Homes Grant Voucher Scheme ended in February 2022. Replacement schemes are BUS (for low-carbon heating) and GBIS (for insulation). There is no current equivalent general home improvement voucher scheme.

Regulations & Standards

• The Renewable Heat Incentive Regulations 2011 (SI 2011/2860, as amended) — historical RHI scheme regulations

• MCS Standards MCS 007 — heat pump installer certification standard

• PAS 2030:2019 — publicly available specification for the installation of energy efficiency measures in existing buildings

• PAS 2035:2019 — retrofitting dwellings for improved energy efficiency; specification and guidance (the overarching retrofit assessment standard)

• VAT Act 1994 Schedule 7A — reduced and zero-rated supplies; energy saving materials

• The Energy Company Obligation 4 (ECO4) Order 2022 — ECO4 scheme legislation

• Ofgem: Boiler Upgrade Scheme — BUS guidance for installers and homeowners

• BEIS: Great British Insulation Scheme — official GBIS guidance

• MCS Certification — MCS certification requirements and installer search

• TrustMark — TrustMark registration and ECO scheme access

• HMRC: VAT on Energy Saving Materials — 0% VAT guidance for qualifying installations

• part a structure — Building Regs compliance for structural elements of retrofit work

• planning vs building regs — regulatory framework for renovation and retrofit projects