The UK government’s new Clean Heat Market Mechanism (CHMM), launched on April 1, 2025, is intended to drive the transition from gas boilers to electric heat pumps. However, Heatable co-founder Ben Price has raised concerns that the scheme may inadvertently place UK-based manufacturers at a competitive disadvantage, while favouring foreign importers.
Under the CHMM, boiler manufacturers must ensure that at least 6% of their sales are heat pumps. Companies that fail to meet this threshold face a financial penalty of £500 for every additional boiler sold above the target. The policy, described by parts of the industry as a ‘boiler tax’, applies specifically to companies producing 20,000 or more gas boilers or 1,000 oil boilers annually for the UK market.
According to Ben Price, this threshold is where a critical imbalance emerges. UK-based boiler manufacturers, many of whom easily exceed the 20,000-unit production mark, are directly subject to CHMM obligations. In contrast, foreign manufacturers importing into the UK often sell fewer than 20,000 units per year. As a result, many imported boiler brands are able to avoid the 6% heat pump sales requirement, and crucially, the associated fines for non-compliance.
“The reality is that many non-UK-based boiler brands, often operating through importers or smaller distributors, will fly under the CHMM radar simply because they don’t breach the 20,000 boiler threshold,” Ben explained. “Meanwhile, major UK brands face regulatory penalties if they don’t rapidly increase heat pump sales – penalties their foreign competitors may largely escape.”
The scheme’s rules do acknowledge “near-threshold suppliers” – companies manufacturing between 15,000 and 19,999 gas boilers – who must still register and report sales. However, they are not subject to the same heat pump sales targets or financial penalties.
Critics argue that this creates a two-tiered market. UK manufacturers, already investing heavily in heat pump technology and production facilities, must simultaneously absorb the cost of compliance while competing against imported brands that face fewer regulatory hurdles.
This loophole, Ben suggests, risks discouraging domestic investment at precisely the moment when the government seeks to boost the UK’s clean heat manufacturing sector. It could also reduce the overall effectiveness of the CHMM if a significant share of the market continues to operate outside its full reach.
The CHMM is part of the UK’s broader ambition to dramatically ramp up heat pump installations, offering grants of up to £7,500 to consumers and aiming for 600,000 installations annually by 2028. Yet while the government’s targets are bold, Ben warns that unintended structural imbalances in the policy could hinder progress unless addressed.
“If we truly want to transition the UK to clean heating, we need a level playing field – one where all manufacturers selling into the UK market, domestic or foreign, face the same obligations and incentives to support the shift,” Ben added.
The Clean Heat Market Mechanism is currently scheduled to operate through March 31, 2029, with annual targets and a new credit trading system launching later this year to provide additional compliance pathways for manufacturers.
