Last updated: 28 December 2023
Next review: 13 October 2024
Retrofit can be a very expensive process. Retrofit improvements will reduce your fuel bills. These improvements can involve very large upfront costs and long payback periods.
There are some grants and financial incentives you may qualify for.
Clean Heat Grant (Boiler Upgrade Scheme)
Until April 2025, 90,000 households will be able to apply for a grant to help afford a low carbon heating system. The grant provides £5,000 for the purchase and installation of an air source heat pump, or £6,000 grant to help buy a ground source heat pump.
- To be eligible for the grant a homeowner must have a valid Energy Performance Certificate.
- The certificate cannot have any outstanding recommendations for loft and cavity wall insulation.
- The grant does not have an income restriction which means high or low income homeowners can apply for it.
- Anyone living in a new build property (unless self-built) or social housing will not be eligible to apply.
- The heat pump installer must be from an MCS certified.
- Your heat pump installer will be responsible for applying for the voucher.
- The scheme is expected to operate a first come first served basis.
- The voucher for a air source heat pump will be valid for three months and the voucher for a ground source heat pump will be valid for six months.
This grant replaced the Renewable Heat Incentive which closed to new applicants in March 2022. If you had successfully applied for the Renewable Heat Incentive, your payments will keep coming through as normal. These payments will continue until the end of your contract (a total of 7 years).
From April 2022 to April 2027, the cost of certain improvements will be VAT exempt. This applies to the supply and installation of these improvements. This will lower the cost of these improvements by between 5 to 20%. This exemption is applied for by a contractor who is
installing energy saving materials (such as insulation)
installing grant-funded heating equipment.
A full list of exempt measures has not been published. There are some exemptions to the 0% VAT rate, such as double glazing and domestic battery energy storage.
Energy Company Obligation (ECO) scheme
- The Energy Company Obligation (ECO) is a government scheme. This scheme requires some energy suppliers to help with the cost of improving a home's energy efficiency. These suppliers will provide grants to pay the whole cost or some of the cost of these improvements. These improvements can include wall insulation and boiler replacements.
- The eligibility criteria for ECO is quite complex. The scheme requires a household to be low income and experiencing some kind of vulnerability or fuel poverty. To find out if you are eligible, you should speak to your energy provider. You can also find out if you are eligible by speaking to the Energy Advice helpline. To contact the Energy Advice helpline, call 0800 444202
- More information on the Energy Company Obligation.
Greater London Authority (GLA) Warmer Homes Scheme
The GLA offers grants of between £5,000 to £26,000 to homeowners, private tenants, and private landlords to make their homes more energy efficient. The scheme will also include an expert completing an assessment of the whole home to identify the best improvements. The grant amount will depend on:
- The existing energy efficiency rating of the home. Your home needs to have an Energy Performance Certificate (EPC) rating of "D" or below.
- The tenure of the home. Social housing tenants are not eligible.
- The home's current fuel type.
- Household income. The household income needs to be low or the homeowner or tenant receives certain benefits.
Call SHINE London on 0300 555 0195 to speak to the Warmer Homes Advice Service to see if you are eligible, or find more information about the Warmer Homes scheme on the Mayor of London's webpage. You can view the terms and conditions of the scheme on the Mayor of London's webpage.
The Solar Together London Programme. This programme runs a collective purchasing scheme. which helps members to receive
- discounted solar panels,
- discounted battery storage,
- discounted electrical vehicle.
The Smart Export Guarantee
- This guarantee pays customers for excess renewable energy they have generated.
- Energy suppliers of a certain size are obligated to be part of this scheme. By speaking to different energy companies you can ensure you receive the best tariff for your energy. Your energy suppliers for incoming and outgoing electricity do not have to be the same.
- Estimates for how much a typical household could make are usually between £75 a year and £110 a year.
- More information on the Smart Export Guarantee.
Electric Vehicle Homecharge Scheme
- Under this scheme the government has to pay up to 75% of the cost of buying and installing an EV charge point in your home. The government's contribution is limited to £350 including VAT.
- From March 2022 this scheme is only for homeowners who live in flats or people in rental accommodation. The recipient must own or lease a qualifying electric vehicle and has dedicated off street parking at their property.
- An eligible applicant must have an approved installer apply for the grant on their behalf.
- More information on the Electric Vehicle Homecharge scheme.
A green mortgage takes multiple forms but the two most common are
- A mortgage that rewards a person for buying or owning an energy efficient home (usually EPC A or B). The homeowner is rewarded as they are offered more favourable mortgage terms such as a lower interest rate or cashback upon sale.
- Money is lent at discounted rates to enable a homeowner to pay for green home improvements.
Green Mortgages are offered by many providers.
- Retrofit measures can be eligible for Capital Gains Tax relief.
- Capital Gains Tax often applies when you own multiple properties (such as Buy to let, second homes, inherited properties) and sell one.
- If you are selling the home you live in (or have lived in at some point) as your main home, you will not pay any Capital Gains Tax or you may not pay the full amount.
- When a property is sold, the capital gains (the difference between what you paid for the property and the amount you sold it for) is taxed. This tax can be at a rate of 18% if you capital gain is between £12,300 to £50,001, and 28% if your capital gain is over £50,000.
- To receive the relief a retrofit measure has to be considered "capital expenditure", not "revenue expenditure".
- "Capital expenditure" is expenditure on a permanent or long lasting improvement to a property. Such as adding an extra bedroom, a loft extension, or replacing an existing feature with a better quality type.
- "Revenue expenditure" is expenditure to maintain an asset. Such as decorating or repairing an existing feature.
- We recommend seeking advice from a professional on tax issues.
- Access the government's Capital Gains Tax calculator.
Other sources of retrofit finance
Other sources of retrofit finance such as equity release schemes are available. View this blog post by the Energy Saving Trust for more information on these alternative forms of retrofit finance.