The ‘boiler tax’ explained: what the Clean Heat Market Mechanism really means for Milton Keynes homeowners

You may have seen headlines recently about a so-called ‘boiler tax.’ You might have heard that boiler prices are going up (SPOILER ALERT: prices are increasing from April 1st. Click here to jump straight to the figures) or that the government is forcing people to switch to heat pumps. There’s a lot of noise around this topic and not much clarity, particularly for homeowners in Milton Keynes, Northampton, Bedford and the surrounding area who just want to know whether it affects them and what, if anything, they should do about it.

This article aims to cut through the confusion. We’ll explain what the Clean Heat Market Mechanism actually is, what changed in Year 2 of the scheme, how it affects the price of a new boiler, and what we think Milton Keynes homeowners should know right now.

What is the Clean Heat Market Mechanism?

The Clean Heat Market Mechanism — often shortened to CHMM and sometimes called the “boiler tax” in the press — is a UK government scheme that came into effect in April 2025. Its goal is to accelerate the shift away from gas and oil heating and toward low-carbon alternatives, primarily heat pumps.

Heating our homes currently accounts for around 17% of total UK carbon emissions, and the government needs to bring that figure down significantly to meet its net zero targets. The CHMM is one of the tools it’s using to do that.

Here’s how it works: rather than targeting homeowners directly, the scheme places obligations on boiler manufacturers. Any company that sells 20,000 or more gas boilers in the UK each year must also ensure that a rising percentage of its sales come from heat pumps. If they fall short of that target, they face a financial penalty for every unit of the obligation they miss.

In simple terms: if you’re Worcester Bosch, Vaillant, Ideal or Baxi, the government is now telling you that you can’t just sell gas boilers — you have to sell heat pumps alongside them, and that proportion has to grow every year.

What changed in year 2?

Year 1 of the scheme ran from April 2025 to March 2026, with a target of 6% — meaning heat pump sales needed to represent 6% of each manufacturer’s eligible gas boiler sales.

Year 2, which runs from April 2026 to March 2027, raises that target to 8%. The government set this figure following a consultation in which it noted that certified heat pump installations grew by 43% in 2024 compared to the previous year, suggesting the market is growing enough to make the higher target achievable.

The penalty for missing the target remains at £500 per unmet unit — significantly lower than the originally proposed £3,000 fine that caused such an outcry when the scheme was first announced, and which led to the scheme being delayed by a year while industry consultation took place.

Manufacturers also retain some flexibility — they can carry forward up to 35% of their annual target from one scheme year to the next, and can acquire credits from other manufacturers who have exceeded their own targets.

Is this a tax on homeowners?

Technically, no, but it does have a knock-on effect. The CHMM is a policy that applies to manufacturers, not to households. There is no government charge or tax added to your boiler installation.

However — and this is the part that affects you in practice — manufacturers who face penalties for missing their heat pump targets are passing those costs on to customers through higher boiler prices. This is the reason the “boiler tax” label has stuck, even if it isn’t technically accurate.

Major brands including Worcester Bosch, Baxi, Ideal and Vaillant have already increased their boiler prices by around £95–£120 as a direct result of the scheme. As the Year 2 target rises to 8%, that cost pressure on manufacturers increases further, and further price adjustments are possible as the scheme progresses.

You won’t see a “CHMM charge” on your invoice. But new boilers are more expensive than they were two or three years ago, and part of the reason for that is the CHMM.

What does this mean for you practically?

If you’re considering replacing your boiler this year, the main practical implication is that new boiler prices are higher than they were a few years ago.

If your boiler is relatively new and well-maintained, the CHMM has no meaningful impact on your day-to-day costs. Keeping up with your annual service is still the single most important thing you can do to protect its lifespan and efficiency.

If you’re interested in heat pumps, the government’s Boiler Upgrade Scheme currently offers a £7,500 grant toward the cost of installing a heat pump, and the CHMM is designed to grow the market over time which should gradually bring installation costs down. However, heat pumps aren’t the right solution for every home — particularly older properties that would need significant insulation upgrades first.

If you’re a landlord, there’s nothing in the CHMM that changes your legal obligations around gas safety, annual servicing or CP12 certificates. Those requirements remain exactly as they were. It’s worth noting landlord requirements have changed around EPC ratings, and upgrading to a high-quality condensing boiler can significantly improve this!

Our final thoughts

The CHMM policy is trying to solve a genuine problem: household heating does of course contribute to carbon emissions and the UK does need to transition to lower-carbon alternatives over time. But the rollout of the scheme has been bumpy, the communication to homeowners has been poor, and in many cases, installation itself has been poor. Often leaving homeowners confused, and sometimes out of pocket with unexpected bills, we see the frustration and disappointment from customers who come to us for help.  

For most homeowners in Milton Keynes and across our service area, the impact is simple: higher boiler prices in recent years, but no shortage of availability and no requirement to switch to a different type of heating. The bigger decisions around heat pumps versus gas boilers, insulation upgrades, and long-term heating strategy are worth having with a trusted local engineer.

If you’re unsure what the right heating decision is for your home — whether you’re replacing a boiler, considering a heat pump, or just want to understand your options — get in touch with the Lime Heating team.

In the meantime, if you have an older boiler that could do with a check-up, our annual boiler service is the best way to keep it running efficiently and extend its lifespan, whatever the policy landscape looks like.