Ground Source Heat Pumps
March 5, 2026
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£7,500 GRANT AVAILABLE FROM GOV.UK
Discover if you qualify for a free £7,500 grant to upgrade your home’s heating system to an energy-efficient heat pump – just pay for installation!
Funding grants worth thousands are available to eligible households to help towards the cost of installing a heat pump. Under the Boiler Upgrade Scheme, those who qualify could receive up to £7,500 towards the costs of installing an air source heat pump system.
Grants are free and will allow you to get a heat pump at a fraction of the cost. You do not have to pay any of the grant back.
Heat Pumps partners with & supports hundreds of approved heat pump installers throughout the UK. Regardless of your location, we are local.
Enquire today and find out if an air source heat pump (ASHP) is suitable for your home and what options are available to you. You may even be eligible for free heat pump funding towards a new air source heat pump.
To help UK households, energy-saving measures such as heat pumps are subject to 0% VAT, down from the previous 5%. This VAT-free period will run until 2027.
A heat pump is a highly efficient low-carbon method of heating your home. Watch the video above to find out how much difference having an air source heat pump installed could make to your home and your energy bills…
An air source heat pump and fan unit looks typically like an air conditioning unit and is usually placed next to an external wall and fitted to the ground, with pipes installed to carry hot water through them. Air source heat pumps are a type of renewable energy technology that allows you to produce energy from outside air, meaning you could save significantly on your energy bills.
Unlike the majority of home heating systems, which either burn fuel or convert electricity into heat, air source heat pumps are different. Instead, they suck in air that is outside, it is then condensed, heating it to generate warmth for the home. This makes them a more efficient eco-friendly option as they bring in more heat energy than the electrical energy that is required to run the heat pump, so an air source system will normally cost less to run than a traditional heating system.
Heat pump funding is available to eligible households as part of the Boiler Upgrade Scheme where applicants can receive a grant worth up to £7,500 in order to have an air source heat pump system fitted. It is part of the £15 billion Warm Homes Plan designed to upgrade up to 5 million properties by 2030.
At a time when households are under increasing pressure from the escalating cost of energy bills, the scheme will not only help those that are likely to struggle with the cost of heating their homes, but also those who are looking to replace an energy-inefficient fossil fuel heating system. This marks a change from previous schemes of this nature which had certain income or benefits-related eligibility criteria for funding.
To help households further, energy-saving measures such as heat pumps are subject to 0% VAT, down from the previous 5%. This VAT-free period will run until 2027.
Simply put, an air source heat pump functions similarly to a fridge but it works in reverse, to heat the home. They transfer heat rather than generate it. Here is a breakdown of how it works:
Air source heat pumps are a type of high efficiency, eco-friendly, low carbon heating system, with the potential for huge savings to be made, especially if you are replacing an old inefficient heating system with one of the best heat pumps. Potential annual savings (based on an average sized, three-bedroom semi-detached home, with radiator upgrades as required) are as follows:
| Existing system | Annual savings by switching to air source heat pump | Co2 savings (kg/year) |
| Old G-rated gas boiler | £260 | 2,900 |
| New A-rated gas boiler | -£40 | 1,900 |
| Old electric storage heater | £1,200 | 2,300 |
| New electric storage heater | £700 | 1,600 |
| Old G-rated oil boiler | £65 | 4,400 |
| New A-rated oil boiler | -£220 | 2,900 |
| Old G-rated LPG boiler | £700 | 3,400 |
| New A-rated LPG boiler | £270 | 2,200 |
Source Energy Saving Trust: Savings will vary depending on the size of your home, any heating system upgrade and fuel type being replaced. You can expect the savings to range between old and new, depending on the age of your current heating system.
To encourage the uptake of energy efficient measures like heat pumps, the government has made it possible for installations up to March 2027 to be done with 0% VAT payable.
Additionally, funding grants worth thousands are available to eligible households to help towards the cost of installing a heat pump. Under the Boiler Upgrade Scheme, those who qualify could receive up to £7,500 towards the costs of installing a new heat pump system.
Funding grants are free and will allow you to get a heat pump at a fraction of the cost. You do not have to pay any of the grant back.
With a focus on the UK moving away from fossil fuel heating and transitioning to more energy efficient systems (for example, the government banning all new homes from installing gas and oil boilers by 2035), this means that low-carbon heating systems are becoming commonplace. This means that it is only a matter of time before most households that are suitable will have a heat pump system that will help them use less fossil fuels and save energy and reduce their bills.
An ASHP system needs electricity to work, but uses less than the quantity of heat they move from outside to inside, leading to savings. The amount you save will depend on a number of factors including your heat pump set up, the heating system you have replaced, your electricity tariff, the costs of the fuel you are replacing, plus your location and the average air or ground temperatures throughout the year. If you benefit from the financial assistance towards an air pump you could save several hundred pounds on heating each year.
Depending on the size of your property, air source heat pump installation costs can vary from around £7,000 – £13,000. With a heat pump grant, you can get funding of up to £7,500 under the Boiler Upgrade Scheme to cover a sizeable portion of the costs. Additionally, funding for vulnerable households is available under the ECO4 scheme, so it could be possible to get an air source heat pump, as well as additional ECO measures, such as solar panels and insulation.
Funding under the Boiler Upgrade Scheme or clean heat grant is available to households where a heat pump is replacing an existing fossil fuel system or direct electric system and the heat pump will provide all heating, as well as domestic hot water. The scheme replaces the Domestic Renewable Heat Incentive (RHI) scheme which aimed to reward homes that switched to energy-efficient measures such as heat pumps and closed to new applicants in March 2022.
Funding for a free air source heat pump may also be available under the ECO4 Scheme. Eligibility for ECO4 is closely related to household income to ensure that fuel poor households who are not in receipt of benefits are still able to access the available funding. Previously many households may have been prevented from applying for energy grants they did not receive any benefits, even though they were low-income households.
Aside from eligibility based on benefits, there is the option of grants for households that have a household income of £31,000 or less. Additionally, the scheme aims to primarily help homes with a low Energy Performance Certificate bands D, E, F to G to boost their EPC rating. The installers must be MCS certified and there must be no recommendations on the valid EPC for loft and cavity wall insulation.
Those in Scotland and Wales are also able to access heat pump grants through the following Schemes:
There may be circumstances, such as where you have a new A-rated gas boiler, where it does not make economic sense to replace it with an air source heat pump or even a ground source heat pump. See the estimated figures above where it suggested that it would in theory be approximately £14 more expensive each year to run a heat pump in place of a new A-rated gas boiler. However, over time as your boiler becomes less efficient, and as the costs of energy continue to spiral, a heat pump will very quickly become a more cost-effective option.
Air source heat pumps are not dependent on specific weather conditions, so it doesn’t particularly matter geographically where you are located. What is more a priority is the type of property you have, and your current heating system.
Air source heat pumps heat water to a lower temperature than traditional gas boilers, so they are most suitable for heating well-insulated homes with underfloor heating, or where there are large radiators that function at lower temperatures. However, heat pump systems can sometimes be installed without these.
In England and Scotland, air source heat pumps don’t normally require planning permission unless the building is listed or is in a Conservation area, area of Outstanding Natural Beauty, or a National park. Those in Wales do need planning permission to install a heat pump. If unsure, you should check with the local planning department.
The external fan does make a small amount of noise, but not much different to that generated by a fridge freezer. If the building is double-glazed then any noise will not be noticeable within the property. ASHPs run much quieter during the warmer months as they don’t need to work as hard to draw in the hot air. Read more about ‘How noisy are heat pumps?’.
There are two main types of air source heat pumps, ‘air-to-air’ and ‘air-to-water’. Most air source heat pump installations in the UK are ‘air-to-water’ and provide both hot water and heating through the pipes and radiators. ‘Air-to-air air’ heat pumps transfer the heat into the air around the home and don’t provide hot water.
The majority of heating systems in the home rely on burning fuel or converting electricity into heat. Heat pumps differ and are more efficient because they don’t generate heat, but instead extract existing heat energy from outside into your home. By delivering more heat energy than the electrical energy they run off, a heat pump system is usually more cost-effective than a traditional heating system such as a boiler.
A regularly serviced and properly maintained air source heat pump system should last in the region of 20 years, but some ASHPs could last up to 25 years.
A new air source heat pump will typically be installed and connected to your plumbing system within 2-4 days, but this will depend on your existing setup. Some installations can be more complex and take slightly longer to complete.
The Government made a commitment for heat pumps to be 0% VAT payable. This was announced in the Chancellor of the Exchequer’s Spring Statement in 2022 and saw 0% applicable from 1 April 2022. The introduction of 0% VAT is in place of the previous reduced VAT rate scheme on energy-saving measures that saw VAT reduced to 5% from the previous rate of 20%.
Depending on the size of the property, air source heat pump installation costs can vary from around £7,000 – £13,000. Funding of up to £7,500 is available to cover a sizeable portion of the cost. Additionally, some funding for vulnerable households may also be available under ECO4, so it could be possible to get funding assistance from both.
The Boiler Upgrade Scheme (BUS) provides grants to support the installation of energy efficient measures such as heat pumps in homes and commercial premises in England and Wales. Approximately £2.7 billion has been allocated to support the expansion of BUS through to 2030 as part of the Government’s Warm Homes Plan.
Heat pump installers can apply on behalf of householders for £7,500 towards the cost of a heat pump (or £5,000 towards a biomass boiler for properties in rural locations and not connected to the gas grid). To be eligible, a households must be replacing an existing fossil fuel system, such as an oil or gas boiler, or an electric heating system with a low carbon heating system.
Additionally, a new £2,500 grant is available to support the installation of air-to-air heat pumps (AAHPs) and for heat batteries for central heating.
The ECO4 scheme is a government-backed initiative that sees energy suppliers obliged to help households improve the energy efficiency of their homes. The scheme is open to all homeowners in the UK regardless of whether they own or rent their property.
Under the scheme, eligible households can receive free or discounted energy efficiency measures, such as an air source heat pump, to help them reduce the cost of heating their home and contribute towards the overall drive to reduce carbon emissions. For more information on the ECO scheme click here.
As the funding under the ECO scheme comes from some of the largest UK energy suppliers as part of a commitment to help households reduce carbon emissions, any grants awarded are free and do not have to be repaid. Grants may cover all or part of the cost of installation, so households may be expected to make a contribution towards the cost of their heat pump installation.
