The Clean Heat Market Mechanism, explained for installers

The Clean Heat Market Mechanism, nicknamed the boiler tax, is a target placed on large boiler manufacturers, not a levy on installers or households. Since April 2025, big manufacturers must earn heat-pump credits equal to a percentage of their boiler sales or pay £500 per missing credit. The price rises you've seen are manufacturers passing that cost on.

What is the Clean Heat Market Mechanism?

It's a government scheme, in force since 1 April 2025, that pushes the heat-pump market along by obliging the companies who make boilers, not the people who fit or buy them. Manufacturers selling more than 20,000 gas boilers a year must match a share of those sales with heat-pump installations, earning tradeable credits as they go. The nickname boiler tax stuck because it's catchier than the real name, but it's misleading: nothing is charged on a boiler at the point of sale, and no line on any invoice is required by law.

How do the targets and penalties work?

The target was 6% of boiler sales in the first year (2025/26) and rises to 8% in 2026/27. A manufacturer that falls short pays £500 for each missing credit. A separate, higher penalty only applies if they then refuse to pay that, so the £500 figure is the real number in play. And because the credits are tradeable, a manufacturer that overshoots its target can sell spare credits to one that undershoots, which is the market part of the mechanism doing its job.

Is there really a boiler tax?

Not as an official charge, no. There is no boiler tax on installers, and none on households; the obligation sits entirely with the manufacturers. What happened is that some manufacturers pre-emptively added a sum, widely reported at around £95 to £120, to the price of each boiler and pointed at the scheme. That's a commercial pricing decision, not a government charge. The distinction matters when a customer sees boiler tax on a quote and assumes the government has put a levy on their new boiler. It hasn't.

Why did boiler prices go up?

Because manufacturers chose to pass their expected scheme costs straight through to the trade, and merchants and installers passed them on in turn. The sums involved are modest against the price of an installed boiler, but they're visible, and visible price rises generate questions. If a customer pushes on it, the honest answer is that the manufacturer put its prices up in response to a government target, the same way any business reprices when its costs change.

Does the Clean Heat Market Mechanism affect installers?

Not directly. You're not liable for anything under the mechanism, you don't have to report anything, and there's no paperwork with your name on it. The two real effects on your working week are that boiler prices nudged up, and that the policy is one more signal of the long-term push toward heat pumps. Neither is an emergency. Both are worth understanding, because the engineer who can explain the boiler tax in plain English on a doorstep is the one who gets believed on everything else.

What should you say when boiler tax appears on a quote?

Keep it to three sentences. The government set heat-pump targets for boiler manufacturers, not for you or me. Some manufacturers put their prices up in response, which is where the boiler tax line comes from. Nothing on this invoice is a government charge. That's the whole story, and it takes less time to say than the customer spent reading the headline that worried them.