Grants and funding for commercial HVAC
There is genuine funding for commercial HVAC — but it is the tax system, not a grant. There is no commercial equivalent of the £7,500 Boiler Upgrade Scheme. Here is what actually applies in 2026, marked live-law or end-phase, and dated.
There is no commercial equivalent of the £7,500 domestic Boiler Upgrade Scheme. Commercial HVAC is funded mainly through the tax system — full expensing (100% first-year deduction, made permanent from April 2026), the £1m Annual Investment Allowance and the new 40% first-year allowance — plus Climate Change Levy relief where eligible and, for qualifying industrial sites only, the winding-down Industrial Energy Transformation Fund. The full funding guide is being finalised.
The schemes in detail
Full Expensing & Annual Investment Allowance (Capital Allowances)
Full expensing: companies paying UK corporation tax buying new, unused qualifying plant and machinery, HVAC plant qualifies, with a 100% first-year deduction and no upper cap, made permanent from April 2026. Annual Investment Allowance: up to £1m of qualifying spend at 100% for unincorporated businesses and items outside full expensing. From 1 January 2026 a new 40% first-year allowance extends first-year relief (including to unincorporated businesses and leased assets).
- Value
- Full expensing worth up to 25p of tax saved per £1 spent for companies at the 25% corporation-tax rate; AIA covers up to £1m at 100%.
The primary commercial funding route for HVAC capital, there is no commercial equivalent of the Boiler Upgrade Scheme. Full expensing is companies only; sole traders and partnerships use AIA and the new 40% FYA. Ancillary works may fall under different rates. Always confirm treatment with your accountant, and note the Autumn Budget 2025 reduced the main writing-down allowance to 14% from April 2026.
Industrial Energy Transformation Fund (IETF) — winding down, confirm status
Industrial sites and data centres in England, Wales and Northern Ireland in eligible SIC codes (manufacturing, recovery/recycling, data centres) for fuel-switching (e.g. gas boilers to heat pumps) and energy-efficiency projects including waste-heat recovery. NOT for ordinary office air conditioning or comfort cooling.
- Value
- Historically 30-50% intervention, SME minimum grant £75,000; committed projects fully funded, but following the 2025 Spending Review no further IETF extension is planned and the second Phase 3 window will not take place.
Operated by DESNZ. Include honestly: the fund is closing to new applications, so treat it as 'was available for eligible industrial sites, confirm current status on gov.uk' rather than an open route. Only relevant to energy-intensive process/industrial buildings, not commercial comfort HVAC.
Climate Change Levy relief via a Climate Change Agreement (CCA)
Energy-intensive sectors that sign a Climate Change Agreement and meet efficiency targets receive large discounts on the Climate Change Levy: from 1 April 2026, 92% relief on electricity and 89% on gas. The main CCL rate from 1 April 2026 is 0.801p/kWh on both electricity and gas.
- Value
- Up to 92% CCL relief (electricity) / 89% (gas) for sites within a sector CCA scheme.
Not a grant for HVAC, but a running-cost lever worth flagging: efficient HVAC lowers energy use and therefore CCL exposure, and eligible sectors can cut the levy sharply via a CCA. Confirm sector eligibility and current scheme status on gov.uk.
0% VAT on qualifying energy-saving materials (until 31 March 2027)
A zero rate of VAT applies to the installation of qualifying energy-saving materials (heat pumps, solar, insulation, heating controls and more) in Great Britain until 31 March 2027, after which it reverts to 5%. Targeted at residential accommodation and qualifying charitable buildings, so it does NOT blanket-cover ordinary commercial premises.
- Value
- 0% VAT on qualifying installs until 31 March 2027 (then 5%).
State the caveat honestly: the relief is residential/charity-focused, so it is relevant to mixed-use owners (the residential element), charity-occupied buildings and any residential portion, not standard commercial offices. Confirm scope on the gov.uk notice before relying on it for a specific building.
Boiler Upgrade Scheme (BUS), DOMESTIC ONLY (noted for clarity)
Grants for air-source and ground-source heat pumps in DOMESTIC properties in England and Wales (up to 45 kWth). NOT available for commercial / non-domestic HVAC.
- Value
- £7,500 for air-source or ground-source heat pumps (domestic only).
Included only to set expectations: facilities managers frequently ask about the £7,500 grant, and it does not apply to commercial premises. Commercial HVAC electrification is funded through capital allowances / full expensing, CCA relief where eligible, and (for qualifying industry) transformation funding, not BUS.