Business Heat Pump Grants & Funding 2026
The story of how business heat pump funding shifted, why old advice is now wrong, and a checklist for getting a grant through an installer.
Where business funding stood a few years ago
Not long ago, the funding picture for a business wanting a heat pump was a patchwork of competitive schemes aimed at larger organisations. Public bodies could bid into the Public Sector Decarbonisation Scheme (PSDS, closed to new bids since November 2024 and now in delivery), and industrial sites could apply to the Industrial Energy Transformation Fund (IETF, closed in July 2025 with no successor). Neither was a simple grant you could claim as of right: both were competitive and application-based. Much of the advice still online dates from that period, which is why it so often reads as if those routes remain open.
This companion piece tells the story of what changed. For the current rules in one place, with the route-by-building table, use the main grants and funding guide.
What closed, and when
- PSDS. Phase 4 closed to new applications in November 2024 and no further phase has been announced. The timeline matters because some local pages and installer sites still speak of “the next phase”. There isn’t one.
- IETF. The last application window shut on 19 April 2024, and in July 2025 GOV.UK said the fund would not be extended and had no successor.
- Green Heat Network Fund. Round 12 ran until 25 September 2026, a deadline that has passed. The scheme funds heat networks rather than single buildings, and the GOV.UK page announced no later round. Check gov.uk before assuming either way.
The practical effect is a gap. A public body, a factory or a large landlord that was waiting for the next competitive round now has no scheduled one to wait for, and any plan that assumed grant funding at the old scale needs to be rebuilt on the allowance and loan routes that remain. That is not a reason to rush; it is a reason to price a project on today’s rules rather than yesterday’s.
Loans moved too. Salix interest-free loans are not available to English public bodies. In Scotland the Salix Scotland Recycling Fund is interest-free and matched equally by the public body, and in Wales the Salix Wales Funding Programme lends at a fixed 2.45%. For private businesses the devolved routes are loans as well: the Business Energy Scotland SME Loan and the Development Bank of Wales Green Business Loan Scheme.
What opened up: the Boiler Upgrade Scheme for small business buildings
Against the closures sits one change that many business owners have missed. The Boiler Upgrade Scheme (BUS) is no longer thought of as a home-only grant. GOV.UK says it can replace a heating system in a building used for your business. It applies in England and Wales to heat pumps of 45 kW thermal or less for a single heat pump (70 kW thermal for a multi-unit system), where you own the property and are replacing a fossil-fuel or direct-electric system.
The rules were also relaxed. The insulation condition ended on 8 May 2024 and the valid-EPC requirement ended on 28 April 2026. Grant values are £7,500, or £9,000 for a property off the gas grid replacing oil or LPG between 21 July 2026 and 31 March 2027, with Ofgem able to issue vouchers to 31 December 2029.
The catch is the size limit. Most medium and large commercial plant is above 45 kW thermal and so falls outside it.
How likely is a grant for your project?
For most commercial sites, unlikely. The test is the size of the heat pump, not the size of the business. If the design heat load needs more than 45 kW thermal from a single heat pump (70 kW thermal from a multi-unit system), the Boiler Upgrade Scheme is out and no other central grant is open. If it is within the limit, you still need to own the building, use an MCS-certified installer who applies for you, be replacing fossil-fuel or direct-electric heating, and have no other public grant on the same heat pump. The fixed grant then matters most to the smallest buildings, such as a shop, a small office or a village hall.
If a grant does not fit, the realistic routes are your own funds with capital allowances, a business loan (including the Scottish and Welsh green loans), asset finance or a lease, or buying heat from a network instead of owning plant. The grants and funding guide sets out how each works, nation by nation.
The tax side: allowances, not full expensing
Capital allowances did not close, but they are widely misdescribed. Full expensing was introduced for main-rate plant, and some commentary has loosely extended it to heat pumps. It does not apply: heating is an integral feature of a building, which is special-rate expenditure. The Annual Investment Allowance gives 100% relief up to £1m a year, and companies can claim a 50% first-year allowance above that, with the rest in the 6% special-rate pool. Ask your accountant to confirm how your specific works are classified. Enhanced capital allowances ended in April 2020.
A checklist for applying through an installer
Because the installer applies for BUS on your behalf, most of the work is asking the right questions.
- Confirm the design heat load is 45 kW thermal or less for a single heat pump (70 kW thermal for a multi-unit system). If not, BUS does not apply.
- Confirm you own the property and that the existing system is fossil-fuel or direct-electric.
- Check the installer’s MCS certificate on the public register at mcscertified.com before agreeing anything.
- Ask for the quote before and after the grant, in writing, with the grant shown as a deduction.
- If the property is off the gas grid on oil or LPG, ask whether the higher value applies and what the dates are.
- Ask what happens if the voucher is not approved before work starts.
- Tell your accountant the planned spend before it happens, and agree who claims capital allowances.
- Keep copies of the voucher, the invoice and the commissioning paperwork.
If you want a second view of your options, send an enquiry; we reply by email. For sense-checking the capital side, see the cost guide.