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Is there a grant for air conditioning for businesses?

Updated 23 October 2026 · SEO Dons Editorial

Can the Boiler Upgrade Scheme pay for business air conditioning?

No. The Boiler Upgrade Scheme (BUS) is a heating scheme, not a cooling scheme. GOV.UK says the grant can replace a heating system in "a building used for your business", and that the scheme is open to people in England and Wales. Ofgem administers it. Of the payments it lists, the three for heat pumps line up for a business building as follows:

TechnologyPayment Ofgem listsBusiness buildings
Air-to-water, ground source and water source heat pumps£7,500Eligible in non-residential properties in England and Wales, if the conditions below are met
The same technologies in an eligible off-gas-grid property£9,000, until 31 March 2027Same conditions, plus the property must be off the gas grid and the system replaced must run on oil or LPG
Air-to-air heat pump£2,500Residential properties only

Even where a business building is eligible, three conditions in Ofgem's installer guidance exclude a cooling project. The new system must replace a fossil-fuel or electric heating system, it must be able to meet the whole space-heating and hot-water need, and its capacity is capped at 45 kWth (70 kWth as a cascade). A like-for-like replacement of cooling plant meets none of these.

Where a business does have oil, LPG, gas or electric heating that a heat pump of that size could replace, that is a heating project with its own funding route. Ofgem says the grant should appear as an upfront discount on the installer's quote, and that the installer must be certified by the Microgeneration Certification Scheme (MCS).

Does the air-to-air payment apply to offices, shops or warehouses?

No. Ofgem's installer page says air-to-air heat pumps can only be installed in residential properties, and its property owner page lists non-residential buildings as excluded for that technology.

For homes, the payment also depends on MCS opening certification for air-to-air installers. MCS's latest update on this, dated 8 September 2026, says installers can apply for certification once the certification bodies have gained UKAS accreditation. Its consumer page says no installers are yet certified to install air-to-air heat pumps. MCS also states that systems that only provide cooling are excluded from its scheme, so a cooling-only unit would be outside the route even in a home.

Is the Industrial Energy Transformation Fund still open?

No. GOV.UK records the fund as closed in July 2025, with no further extension and no successor fund planned. It was aimed at businesses with high energy use, and projects already funded continue to completion, so it is not a route for a new air conditioning project in 2026.

What tax relief applies to air conditioning?

Capital allowances are the main relief, and they are a tax deduction rather than a payment. GOV.UK describes them as letting a business deduct some or all of the value of an item from its profits before it pays tax. HMRC's Capital Allowances Manual includes in its list of integral features "a powered system of ventilation, air cooling or air purification", which is how air conditioning normally falls into the special rate category.

AllowanceWho can claimFit with air conditioning
Annual investment allowanceMost businesses; the limit is £1 millionSpecial rate spending may qualify
50% first-year allowanceCompanies only, on new and unused plantThis is the first-year allowance GOV.UK ties to special rate plant
Full expensingCompanies onlyGOV.UK ties it to main rate plant, so it does not normally fit

The detail, including timing and the replacement rules, is in the guide to capital allowances on commercial HVAC. The wider picture of what is and is not available sits on the grants and funding page. A separate question is whether the 0% VAT rate for energy-saving materials reaches commercial premises, which the guide to VAT on commercial air conditioning answers.

Are there loans or grants for air conditioning in Scotland, Wales or Northern Ireland?

There are loans, and one grant that is currently paused. Each nation's official page is the place to confirm the current position.

  • Scotland. Business Energy Scotland's SME Loan Scheme says loans up to £100k are available for energy and carbon-saving upgrades, with a cashback grant of up to £30k for some measures. Its list of eligible measures includes heating, ventilation and air conditioning upgrades. The applicant must be a Scottish business, not-for-profit organisation or charity that has traded for at least 12 months and meets the SME definition, and it cannot already have started work. An application needs a report from Business Energy Scotland recommending the measures.
  • Wales. The Development Bank of Wales Green Business Loan Scheme offers loans from £1,000 to £1.5m with discounted fixed interest rates. Its typical eligible projects include heating, ventilation and air conditioning replacement. Limited companies, sole traders and partnerships must be based in Wales and have traded for at least two years with one set of filed annual accounts.
  • Northern Ireland. Invest NI's Energy Efficiency Capital Grant listed heating and cooling equipment among the projects it supported, but Invest NI says it is not currently accepting enquiries or applications.

These are loans or time-limited schemes with their own eligibility tests, not general grants for comfort cooling. They also apply only to businesses based in that nation.

What about England?

The checks for this guide found no England-wide grant for air conditioning. Local authorities and combined authorities run their own business schemes, and these change. The government's business finance finder lets a business search by keyword and region. Searched for "air conditioning" on 22 October 2026, it returned a single scheme, a Birmingham incentive for replacing light and heavy goods vehicles, which has nothing to do with cooling plant. Searching the finder again before a project is worth doing, because local schemes open and close.

What should a business do while no grant is available?

  1. Check the heating side first. If oil, LPG, gas or electric heating is also due for replacement, a heat pump within the 45 kWth limit may be eligible for the Boiler Upgrade Scheme, through an MCS-certified installer.
  2. Ask for an itemised quote that separates the air conditioning plant from builder's work, so an accountant can allocate each line to the right allowance. The checklist in how to compare commercial HVAC quotes covers that.
  3. In Scotland, apply to the SME Loan Scheme before starting work, because the scheme page excludes projects already started.
  4. Readers who want to put a project to contractors can send an enquiry through the site's form.

The grants and funding page keeps the other routes together.

Sources

Common questions

Can the Boiler Upgrade Scheme fund a heat pump that also cools?

The scheme conditions are written around heating. The new system must replace a fossil-fuel or electric heating system and be able to meet the full space-heating and hot-water needs of the property. MCS separately says systems that only provide cooling are excluded from its scheme.

Is the 0% VAT rate on energy-saving materials a grant for air conditioning?

No. It is a VAT rate, not a payment, and HMRC limits it to installations in residential accommodation and, since 1 February 2024, buildings used solely for relevant charitable purposes. The VAT guide on this site explains where commercial premises stand.

Should a business wait for the air-to-air payment before ordering?

For a business building there is nothing to wait for, because Ofgem limits the air-to-air payment to residential properties. For homes, MCS said on 8 September 2026 that installer certification bodies were still working towards UKAS accreditation.

Does the Scottish SME Loan cover only small businesses?

Business Energy Scotland says the loan is available to Scottish businesses, not-for-profit organisations and charities that have traded for at least 12 months and fall within the SME definition. Applicants also need a report from Business Energy Scotland and must not have started work.

Can a factory use the Industrial Energy Transformation Fund for cooling plant?

Not now. GOV.UK records the fund as closed in July 2025 with no successor planned. Projects that were already funded continue to completion.

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