The Department for Energy Security and Net Zero (DESNZ) increased the Boiler Upgrade Scheme budget for Scheme Year 3, which ran from April 2024 to March 2025, in two stages. An additional £30 million was announced in November 2024, and a further £25 million on 30 January 2025, taking the total Year 3 budget from £150 million to £205 million1. The Secretary of State also gave Ofgem permission to over-allocate vouchers up to a total of £280 million, to provide certainty that sufficient vouchers would be available during the year1.
Ofgem, which administers the Boiler Upgrade Scheme on behalf of DESNZ, reported that demand was likely to exceed the original £150 million budget, prompting the increases2. The scheme pays upfront capital grants towards heat pumps and, in limited circumstances, biomass boilers in homes and small non-domestic buildings in England and Wales2. Grant levels are £7,500 for air source heat pumps, £7,500 for ground source heat pumps and £5,000 for biomass boilers2.
The Year 3 figures show the budget was not fully spent. Ofgem's quarterly report gives a Year 3 budget allocation of £280 million, with £189,737,500 spent and £90,262,500 unspent or remaining1. Unspent budget is not carried over to the next scheme year1. The £205 million figure and the £280 million over-allocation ceiling describe different things: the budget DESNZ announced, and the maximum value of vouchers Ofgem was permitted to issue1.
"The Department for Energy Security and Net Zero (DESNZ) announced in November 2024 that an additional £30 million was available to ensure sufficient funding for Year 3, and on 30 January 2025, announced a further £25 million, increasing the total BUS Year 3 budget from £150 million to £205 million."
For Scheme Year 4, running from April 2025 to March 2026, the budget is £295 million, with £185.5 million allocated between April and October 2025 and £109.5 million remaining1. The scheme has been extended to 20282.
| Scheme year | Budget allocation | Budget spent | Unspent or remaining |
|---|---|---|---|
| Year 1 (May 2022 to Mar 2023) | £150,000,000 | £50,039,000 | £99,961,000 |
| Year 2 (Apr 2023 to Mar 2024) | £150,000,000 | £88,455,500 | £61,544,500 |
| Year 3 (Apr 2024 to Mar 2025) | £280,000,000 | £189,737,500 | £90,262,500 |
| Year 4 (Apr 2025 to Mar 2026) | £295,000,000 | £185,500,000 | £109,500,000 |
Source: Ofgem, Boiler Upgrade Scheme Quarterly Report, Issue 141
Why it matters for households
The budget increases were a response to demand for vouchers running ahead of the original allocation, and the over-allocation permission was intended to keep vouchers available rather than rationed1. For a household considering a heat pump, the practical effect was that the grant remained open through Year 3 rather than closing early on funding grounds. The scheme's structure, including the two-stage application process and the eligibility rules, is set out in the application guide and the eligibility guide.
The figures also show that a substantial share of each year's budget went unspent, and that unspent money does not roll forward1. That means funding available in one scheme year is not a reserve for the next. The grant amount itself, at £7,500 for heat pumps, is set out in the grant amount guide.
What happens next
DESNZ conducted a consultation in April 2025 on proposed changes to the scheme, and at the time of Ofgem's annual report the department was considering potential amendments to the BUS regulations2. No outcome of that consultation is reported in the sources. The scheme's budget for 2025 to 2026 is £295 million, and the scheme has been extended to 20281.
Sources2 cited
- Boiler Upgrade Scheme Quarterly Report – Issue 14, ofgem.gov.uk
- BUS Annual Report 2024 to 2025, ofgem.gov.uk