The government is being urged not to overlook rural, oil-heated homes if it reduces VAT on gas and electricity in the upcoming Autumn Budget.
Around 23,000 households in Gloucestershire could miss out on cuts to their heating bills if VAT discounts on gas and electricity are announced, with OFTEC – a trade association representing manufacturers of liquid fuel heating equipment – writing to the Prime Minister to warn him not to ignore rural communities.
The government's landmark Warm Homes Plan, which was expected to lay out proposals on how households could transition to greener heating systems, was scheduled to be published in October 2025 but has been delayed.
There is speculation that it will instead prioritise VAT discounts on gas and electricity bills, leaving rural households 'in limbo.'
In its letter to Prime Minister Kier Starmer, OFTEC and UKIFDA argue that overlooking oil-heated homes for discounts is 'unfair and discriminatory'.
It explains that for rural homes to adopt heat pumps, in line with the government's current decarbonisation policy, homeowners could face upfront costs of over £20,000 due to the work required to get them operating efficiently on these often older properties – meaning that the £7,500 Boiler Upgrade Scheme (BUS) grant falls short of what's needed for oil-heated households to make that switch and neither consumers, nor the government, can currently afford to make up the shortfall.
OFTEC and UKIFDA are asking the government to instead support a renewable liquid fuel solution, switching from oil heating to a blend with kerosene, providing reductions to emissions at no upfront cost – with over 1,000 oil-heated households writing to their MPs in support.
To facilitate this move, it is also urging the government to resolve a legislative anomaly where renewable heating fuel faces an additional 10 pence per litre in excise duty, where heating oil is currently exempt.
OFTEC CEO Paul Rose and UKIFDA CEO Ken Cronin, said: 'Once again there’s a feeling rural homes are being overlooked by this government. If the chancellor cuts VAT for gas and electricity bills in her upcoming budget but ignores oil-heated households, what kind of message does this send to hard pressed rural communities?
'The delay to the Warm Homes Plan and a failure to come forward with a pragmatic and cost-effective approach to decarbonise oil heated homes is part of a troubling pattern of failing to understand the needs of rural homes.
'The government genuinely needs to explore the range of solutions on offer outside of just electrification. We have provided overwhelming evidence that renewable liquid fuels can be delivered with minimal upfront cost to consumers and drastically cut emissions.
'We’ve also shown that there is more than enough fuel for use across the UK’s 1.7 million oil-heated homes. The government now needs to provide some certainty for rural communities who are stuck in limbo.'
Chancellor Rachel Reeves is due to deliver her Autumn Statement on Wednesday 26 November 2025.
