Plumbing and heating business finance: vans, tools, stock and cash flow

It depends on how quickly the paperwork moves. Ofgem processes an approved redemption for payment on its next scheduled payment day, and payment days are weekly, so the wait after a job is set by how soon you commission the system, generate the MCS certificate, apply to redeem the voucher and pass Ofgem's final checks. Installers in England and Wales must show the full grant as an upfront discount to the property owner, so the business carries it until Ofgem pays. We arrange working capital for heat pump installers carrying several grants at once.

Keeping grant money moving

• Grant values. £7,500 for an air source or ground source heat pump, £5,000 for a biomass boiler and £2,500 for an air to air heat pump, plus an extra £1,500 until March 2027 for air or ground source systems in properties heated by oil or LPG with no mains gas.
• Voucher deadlines. From the date a voucher is issued you have three months to complete the installation, or six months for a ground source heat pump.
• Paperwork on the day. Generate the MCS certificate promptly, as Ofgem's final checks include reviewing it.
• Track it as a debt. List each grant awaiting payment with the date you applied, as you would an unpaid invoice.

Can a heat pump installer get finance to cover grant payments?

Yes. A revolving credit facility drawn as installs complete and repaid when Ofgem pays suits a steady flow of jobs, and a working capital loan can fund heat pumps and cylinders ahead of a busy season. Lenders look at your MCS certification, install volumes and how long past grants took to arrive. Ofgem sets out the redemption steps on its Boiler Upgrade Scheme page for installers. Instant Quotes shows lenders on our panel that may fit, with no credit search.

Not when a heat pump is installed in a home before 1 April 2027. HMRC zero rates the installation of energy saving materials, which include heat pumps, in residential accommodation until 31 March 2027, and the rate then reverts to 5%. A heat pump supplied without installation is standard rated. We arrange VAT funding and working capital for heating firms whose VAT position shifts as their work mix changes.

Do plumbers charge VAT on a new gas boiler?

Yes, a VAT registered plumber normally charges the standard rate. HMRC treats energy efficient boilers as standard rated, with a 5% reduced rate only on the grant funded part of an installation of heating equipment in the main home of a qualifying person, meaning someone who receives the grant and is aged 60 or over or receives certain benefits. A firm fitting both boilers and heat pumps can make zero rated and standard rated supplies in the same quarter, so its VAT bill can swing from one return to the next. HMRC sets out the rules in VAT Notice 708/6. Our VAT loans page explains how a large quarter can be spread, and Instant Quotes lists panel lenders for a VAT bill without touching your credit file.

• Domestic plumbers and heating engineers adding a van or an apprentice.
• Gas engineers moving into commercial boilers and plant rooms.
• Heat pump and renewable heating installers scaling up.
• Mechanical subcontractors working for main contractors on housing or commercial jobs.

Electricians face many of the same issues, and our page on electrical contractor finance covers that trade.

Installers moving into low carbon heating need cash to carry the work. Under the Boiler Upgrade Scheme in England and Wales, GOV.UK lists grants of £7,500 for an air source or ground source heat pump. Customers must use an MCS certified installer, the installer applies on the customer's behalf, and the grant is taken off the amount the customer pays. That means the installer is funding the grant element of each job until the claim is settled, on top of buying the equipment, so cash flow planning matters as volumes grow. Check the current rules on GOV.UK's Boiler Upgrade Scheme pages, which can change. For businesses installing renewable systems more widely, our page on green business finance may help.

Gas work is regulated too. HSE says anyone employed to work on gas appliances in domestic premises must be Gas Safe registered and competent in that area of work, and lenders funding a gas business will expect that to be in place.

Illustrative example only, not a quote. A heating firm with two engineers wins a contract to fit systems on a new housing phase. It buys a second van on hire purchase, so the cost is spread over several years. The contractor pays on applications, with CIS deductions taken, and payment arrives well after the materials have been bought. The firm uses selective invoice finance against the contractor's certified applications, drawing cash as each one is approved. Domestic work continues to be paid on completion and is left out of the facility.

Compare the total cost of each option, including arrangement fees, early settlement terms and, for invoice finance, service charges and any minimum term or notice period. Asset finance may need a deposit. Pricing depends on the business and the facility, so we lay out each offer's full cost side by side.

For a one-off cash need, an unsecured business loan can be simpler than an invoice facility. Trade accounts with your merchant spread the cost of stock, and some firms use a revolving facility for materials.