Update: The Boiler Scrappage scheme has now closed. Here are other ways to save on replacing your boiler.

You can also save money on your heating bill by switching your energy provider.

What is the boiler scrappage scheme?

The Government's Boiler Scrappage scheme works in a similar way to the Car Scrappage Scheme and aims to give you 400 off the cost of getting a new boiler. The scheme is aimed at helping those who have older, less-efficient G-rated boilers in their homes with the cost of upgrading to a newer, more economical model. Of the 3.5 million homes in England that currently use G-rated boilers it is estimated that over 125,000 homes will be able benefit from the scheme.

Why you might need to replace your boiler?

Replacing your old G-rated boiler makes sense as they are far less energy efficient than modern ones. For example, many modern boilers have efficiency ratings of 90% or more compared with a lowly 70% for your old G-rated boiler.

The Energy Saving Trust estimates that upgrading to a more energy efficient model could save you around 200 a year on your household bills and reduce your CO2 emissions by 140,000 tonnes.

What financial assistance you can get with a new one?

Announced last year by the government in their pre-budget report, the boiler scrappage scheme gives householders 400 off the cost of replacing their old boiler and is issued by the Energy Saving Trust in the form of a refundable voucher.

What's more, major energy suppliers like British Gas and Npower are offering to match the 400 refund being offered by the government. This could mean a potential saving of 800 off the cost of a new boiler.

But before you sign up for any deal, make sure you shop around first. It always makes sense to get quotes from independent installers as well as the major supplies, as they can charge much higher installation fees.

Who is eligible?

To be eligible for the scheme, your boiler needs to be a working, gas fired, G-rated model which is used to heat your home. Generally, if your boiler is over fifteen years old and has a pilot light that doesn't go out, then it is likely to be G-rated.

Oil-fired boilers that are over twenty five years old can also be replaced under the scheme and if you are over 60, then your boiler can be replaced even if it is not working. Also the scheme is only eligible to home owners and landlords in England.

How can you claim?

If you are sure that your boiler qualifies for the scheme then your next step should be to get quote for the installation of a new one. Choose the boiler that's right for you and again, get a few different quotes to make sure that you get the best deal.

Also make sure that your installer is qualified to do the work they are quoting for and only ever use an OFTEC or Gas Safe registered technician.

Once you have a quote you are happy with, you should email the Energy Saving Trust at boilerscrappage@est.org.uk or call them on 0800 512 012 with the following details:

  1. Your name and address.

  2. Details of both your old and new boiler.

  3. Name and address of your chosen installer and proof that he has visited your home.

The government will start issuing vouchers from 18th January, 2010. If your application is approved then you should receive your 400 voucher in approximately 10 days. All vouchers are valid for 12 weeks from the date of issue, so you need to get the work done within this period. Whatever you do, don't start work before you receive your voucher as this will invalidate it.

The vouchers are issued on a refundable basis which means that you will have to pay for the installation first and then claim back your 400. All you need to do is return the voucher and the invoice to the Energy Saving Trust once the work has been completed.

The Energy Saving Trust will then aim to refund your 400 within 25 working days from receipt of the voucher.

Any pitfalls to watch out for?

Replacing your boiler is a serious undertaking, both in terms of expense and potential inconvenience. Vouchers are only issued if you replace your old boiler with one of the most energy-efficient, A-rated boilers. These aren't cheap and can cost on average between 2,000 and 3,000 to install.

You will also have to pay for all work and then wait up to a month to get your 400 refunded, so always keep the issue of cash-flow in mind. However, when you take into account the future savings you will make on your energy bills, the long-term benefits of replacing your boiler far outweigh the initial expense.

When you're getting a quote for the installation of your new boiler, it is a good idea to have your whole central heating system checked out. If there are problems with the rest of your heating system then just replacing the boiler will have little overall benefit. It is better to get an idea of the real costs involved rather than be hit with a much larger bill than expected if your engineer uncovers something nasty.

Also take into consideration the time of year that you have the work done as you could find yourself without heating and hot water while the work is being carried out - not nice in the middle of one of the coldest winters on record!