The Budget on 28 October 2026 confirmed a change that every heat pump installer will feel next year: from April 2027, heat pumps will carry 5% VAT. At the same time, Boiler Upgrade Scheme (BUS) spending is being held at its current level rather than increased. Here is what that means on the ground, and how to plan the next five months.
What changed in the Budget
Since April 2022, installing energy-saving materials such as heat pumps in homes has been zero-rated for VAT, a relief due to run until the end of March 2027. The Budget confirmed that after that date heat pumps move to 5%. On a typical domestic job that adds a noticeable amount to the customer's bill.
The BUS grant itself survives, with its funding held at about £400 million. A new Warm Homes Loan Scheme was also announced to help households with the upfront cost. The Heat Pump Association UK was critical, warning that the combination of a VAT rise and frozen grant spending risks another boom-and-bust cycle for the supply chain. You can read the trade reaction in Cooling Post's report (29 October 2026).
Why demand may peak before April
Interest was already high going into the Budget. Government figures quoted by Octopus Energy show more than 9,700 BUS applications in September 2026, a record month. With a VAT rise now fixed for April, many homeowners will want their installation finished, and invoiced, before the deadline. For installers that points to a busy winter and early spring, followed by a possible lull while the market adjusts.
- Expect more enquiries asking for a firm completion date before April.
- Confirm with your accountant how the change applies to jobs that straddle the April date.
- Be clear with customers in quotes about which VAT rate applies and when.
Get your kit sorted before the rush
A compressed installation window leaves little room for waiting on parts. The jobs that slip are usually held up by small items, not the unit itself. Before the new year, it is worth checking you have:
- Commissioning tools rated for A2L and A3 refrigerants. Many new monobloc and split units use R32 or R290, so check your vacuum pump, hoses and recovery kit are suitable. See our A2L installation and commissioning tools and R290 tools.
- Pipework and insulation. Outdoor runs need UV-resistant, correctly sized insulation to protect efficiency. Browse air conditioning pipe and pipework and pipe insulation.
- Brackets, supports and fixings. Have a stock of pipe supports and fixings and general installation materials so jobs are not held up.
- Trunking. A tidy external finish matters to homeowners. Our trunking and cable management range covers most runs.
Plan for after April too
If the trade bodies are right and demand dips after the VAT change, steady service and maintenance work will matter more. Use the busy months to build a customer list for annual servicing, so the work continues whatever happens to new installs.
We will keep watching for detail on the Warm Homes Plan and any further changes to the BUS, and share what matters for installers in the Knowledge Hub.
Need a hand choosing kit? Call the RACS team on 0161 775 1190, Monday to Friday, 9am–4pm.
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