Households replacing their gas boilers will face a levy of £36 under Labour's Clean Heat Market Mechanism, representing a 33 per cent rise on the previous charge, from April 1.
The so-called "Net Zero Boiler Tax" enters its second year, with approximately 1.5 million families expected to face this additional cost over the coming financial year.
The mechanism places financial penalties on boiler manufacturers who fall short of Government-imposed targets for heat pump sales.
Manufacturers can pass these costs on to consumers at the point of purchase, meaning households may pay more when replacing their heating systems.
For many households, the cost difference between gas boilers and alternative systems remains significant.
A typical heat pump installation costs around £13,500, and while the Government offers a £7,500 subsidy, the remaining expense can still be substantial.
Ongoing costs also vary depending on energy tariffs and household circumstances.
Some households may therefore continue to opt for gas boilers where they consider it the more viable option.
Net Zero Boiler Tax rises to £36 as Clean Heat Market Mechanism costs increase for UK households
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This means the levy may apply in cases where households replace existing systems with new gas boilers.
Mike Foster, chief executive of the Energy and Utilities Alliance, raised concerns about the timing of the increase.
Mr Foster said: "Households across the UK are struggling to make ends meet during a prolonged cost-of-living crisis. Despite repeated assurances that the Government is on the side of consumers and focused on cutting costs, the Net Zero Boiler Tax is being increased by a third.
"While £36 might appear modest to policymakers, for families already facing higher food bills, fuel costs and ongoing uncertainty about energy prices, every extra pound matters."
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He said the scheme operates as a fine on manufacturers for missing centrally determined targets
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Mr Foster said: "Those fines do not disappear – they are passed straight on to consumers, turning this into a direct tax on households who need a new boiler."
Data has indicated that accredited heat pump installations in early 2025 were lower than during the same period last year.
The Clean Heat Market Mechanism is intended to support the transition to low-carbon heating by encouraging greater uptake of heat pumps.
However, the policy has drawn scrutiny as to how effectively it supports that transition while balancing household costs.
The Tories have urged Labour to cut taxes on energy bills
| GB NEWSThis comes as the Leader of the Opposition Kemi Badenoch called on Labour to cut taxes on energy bills before offering any direct bailouts if prices rise.
She argues cash payments to households ultimately mean higher taxes, though she did not rule them out entirely.
Energy bills are set to fall briefly in April under Ofgem’s price cap but could rise again because the Iran–US–Israel conflict has pushed up global oil and gas prices.
The Conservatives also want more North Sea oil and gas production and an end to the windfall tax, although ministers say the UK must keep shifting toward homegrown clean energy.
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