Clean Heat Market Mechanism: fossil fuel boiler sales, targets and credits

You must report your fossil fuel boiler sales if you’re classed as a ‘scheme participant’ or ‘near-threshold supplier’ in thethe Clean Heat Market Mechanism (CHMM.).

Check Check if the the CHMM applies applies to you and the timelines for action.

Scheme participants and near-threshold suppliers must:

• monitor their sales of fossil fuel boilers between April and March of each year (2025 to 2028)
• send quarterly reports on their fossil fuel boiler sales

Scheme participants must also send an annual report of their fossil fuel boiler sales and an independent third party verifier’s assurance report.

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Theboilers. annualIt report must include evidence supporting the exclusions of any fossil fuel boiler sales.

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Quarterly sales data

Scheme participants and near-threshold suppliers must send quarterly data on the number of:

• qualifying sales of gas boilers and oil boilers
• excluded sales of gas and oil boilers

Send this data through the the M-CHMM service service within within 28 days of the end of the quarter.

You do not need to send a verifier’s assurance report with the quarterly data.

Email Email chmm@environment-agency.gov.uk to to request a copy of a boiler reporting template. This template will help you gather all the required fossil fuel boiler sales data. This reduces the need for the Environment Agency to contact you to request more information.

You must keep records if you’re a scheme participantsparticipant or near-threshold supplier. This is so you can prove that you have fulfilled your your CHMM obligations obligations (see ‘Maintenance‘Maintain ofrecords records’and audits’ section). The Environment Agency may request these records at any time.

Make sure you keep records of:

• the data
• the evidence on which the data is based, including evidence of any excluded fossil fuel boiler sales

Annual sales data

Scheme participants must send their annual fossil fuel boiler sales data and the supporting documents that go with this through the the M-CHMM service service. You must do this by 30 June after the end of the scheme year.

The annual fossil fuel boiler sales data must include the number of:

• qualifying sales of gas boilers and oil boilers in the sales year
• excluded sales of gas boilers or oil boilers in the sales year

You can use the same boiler reporting template for both the annual and quarterly fossil fuel boiler sales data. You must send the annual fossil fuel boiler sales report with:

• a verifier’s assurance report
• evidence to prove the excluded fossil fuel boilers were either exported outside the UK, or installed in buildings that were not first used or occupied before the installation took place

You should prepare for the annual report in the final quarter of the sales year to give enough time to:

• appoint an accredited verifier
• allow your verifier to complete the verification
• correct any errors or misstatements

SupportingTotal sales

Your annual report will detail the number of qualifying and excluded sales for both gas and oil boilers. Your qualifying sales will be calculated as the total boiler sales minus the total excluded boiler sales.

Your total sales data for gas and oil boilers must include all sales:

• which meet the definitions detailed in regulation 2 of the CHMM Regulations 2025 (particularly the definitions of sale, gas boiler and oil boiler)
• for all brands and companies which are part of the scheme participant’s corporate group

You do not need to report any fossil fuel boiler sales which do not meet these definitions.

The definition of ‘sale’ relates to the first transfer of the boiler. For example, if a manufacturer sells a boiler to a UK-based merchant and that merchant sells the boiler to an installer, then the first sale to the merchant is the relevant sale for CHMM purposes.

The date of the first sale decides which scheme year the fossil fuel boiler sale belongs to.

Providing evidence of total sales

You must provide evidence to show the accuracy of the sales data to your independent verifier. Your evidence must be sufficient for your verifier to confirm that the annual report ‘is free from material misstatement’ in line with regulation 17(1)(c) of the CHMM Regulations.

You must keep evidence to support the total fossil fuel boiler sales data.

You must keep evidence available for inspection upon request by the Environment Agency at any time, in line with regulation 18 of the CHMM regulations.

Excluded sales

You may exclude the sale of a fossil fuel boiler if the boiler was, or was to be:

• exported from the UK
• installed at a new-build property in the UK (that is, a building which has not been first used or occupied before the installation takes place)

When recording and excluding fossil fuel boiler sales, you should consider the definitions of a fossil fuel boiler sale and an excluded sale in the CHMM regulations (regulation 2(1)).

You can only report a fossil fuel boiler sale as an excluded boiler sale if:

• it otherwise meets all the same definitions in regulation 2 of the CHMM regulations
• the sale is included in the total sales data

For example, a fossil fuel boiler with a capacity of more than 70 kilowatts (kW) which has been exported from the UK is not classed as an excluded sale. This is because it does not meet the definition of a boiler under the CHMM regulations.

Providing evidence of excluded sales

You must provide evidence for a fossil fuel boiler sale to be reported as an excluded sale. In all cases, your evidence must:

• show that the excluded boiler sale took place in the relevant scheme year
• detail a specific number of boilers to be excluded

If a manufacturer sells a boiler to a UK-based merchant but cannot evidence the subsequent destination of the boiler, the sale should be included in the total sales data. You should not include the sale in the excluded sales data because there is no evidence to support this.

Exports from the United Kingdom

The Crown Dependencies of Guernsey, Jersey and the Isle of Man are not part of the UK. Sales to these destinations are classed as exports.

Direct exports

If you sell a boiler directly to an undertaking outside of the UK, then you may evidence the exclusion by the provision of one of the following which shows an address outside of the UK:

• a sales contract
• invoice
• delivery note

You should provide this documentation to the verifier and the Environment Agency as evidence for the export of the boiler.

Where contracts or invoices are relied upon, manufacturers should have internal processes to ensure that the delivery address reflects the address shown on the invoice or contract. Verifiers may select a random sample, sufficient to show the required materiality level, and request to see delivery documentation.

Indirect exports

An indirect export is where a fossil fuel boiler has been sold to a merchant in the UK who then exports it.

The invoice or equivalent document from the manufacturer must be supported by evidence of the later export, such as:

• a signed statement from the merchant confirming that the boiler has or will be exported
• an invoice supplied by the merchant showing an address outside of the UK
• warranty registrations with an address outside of the UK

You will need to reduce the risk of duplication as described in the section ‘Avoiding duplication’.

New-build properties

1. Warranty addresses

You may use warranty registrations as evidence of the address at which a fossil fuel boiler has been installed.

You must provide additional evidence to confirm that the address relates to a new-build property. This may come from an independent data source showing the address as a new-build property, such as:

• the Energy Performance Certificate (EPC) register
• building control and planning portals
• the Royal Mail Postcode Address File
• Ordnance Survey Address Base

Alternatively, you can use a commitment by the people completing the warranty registration form to confirm the new-build status, such as:

• agreed terms of service
• contract
• signed statement

Submitting a warranty registration through an online service intended for new-build developers, without safeguards preventing it from being used for retrofit boilers, is not sufficient evidence of a new-build address.

The manufacturer must be able to show safeguards that prevent the new-build developer portal from being used for retrofit boilers. As part of their process of assurance, and in accordance with Regulation 17(1)(c), the verifier will need to consider whether the safeguards are sufficient to produce relevant data which is free from material misstatement.

2. Developer and merchant rebate agreements, installer loyalty schemes and other incentive programmes

Scheme participants may use a range of schemes to incentivise the installation of their boilers in new-build properties, and this may be a source of evidence.

Scheme participants must have checks in place to verify that a boiler claimed to have been installed in a new-build property was not installed as a retrofit.

Your data should be accompanied by a report or statement setting out the detailed procedure followed by the manufacturer to ensure data reliability. As part of their process of assurance, and in accordance with Regulation 17(1)(c), the verifier will need to consider whether the procedure is sufficient to produce relevant data which is free from material misstatement.

3. Invoices direct to new-build developers

Manufacturers may sell fossil fuel boilers directly to new-build property developers, including manufacturers of caravans.

A contract, invoice or delivery note showing a fossil fuel boiler has been sold to a new-build developer will not be considered evidence on its own. You must also have additional evidence showing that it was, or was to be, installed in a new-build property. This is most likely a signed statement from the developer.

Avoiding duplication

Scheme participants may rely on more than one form of evidence. For example, boilers sold directly to a new-build property developer might need one form of evidence, while boilers sold by merchants may require another. A single boiler sale may be captured by more than one evidence stream where multiple forms of evidence are used.

You should reduce the risk of a single boiler sale being counted multiple times as an excluded sale. For example, you could ensure the evidence includes unique identifiers for boilers (such as serial numbers).

Scheme participants who rely on multiple forms of evidence must document (in their procedures) the process for preventing the duplication of excluded boiler sales. As part of their process of assurance, and in accordance with Regulation 17(1)(c), the verifier will need to consider whether the procedures are sufficient to produce relevant data which is free from material misstatement.

Sending supporting evidence

You must send supporting evidence confirming theirthe annual fossil fuel boiler sales data submission.submission if you are a scheme participant. You will need to upload this supporting evidence alongside the annual boiler sales data as one or more attachments.

The supporting evidence can be in any format that the Environment Agency can use. However, it must be comprehensive and correct to show thorough reporting. The data should show how it was gathered and checked for accuracy. It should also allow the Environment Agency to trace excluded fossil fuel boiler sales.

As part of the independent thirdthird-party party verification process, your verifier will ask you to giveprovide evidence to confirm the accuracy of your fossil fuel boiler sales data.data Theyand will also ask for any exclusions you have appliedapplied. to your fossil fuel boiler sales. Your verifier must decide what evidence is enoughsufficient to support verification.

You will need to send this evidence of accuracy with your annual fossil fuel boiler sales data. The Environment Agency will decide if you have given enough evidence.

Verifier’s assurance report

SchemeYou participants must appoint an independent verifier to verify theiryour annual fossil fuel boiler sales report.report if you are a scheme participant. The verifier must meet all these criteria:

• be a member of an ‘appropriate body’ as defined within the the CHMM Regulations regulations
• be independent of the scheme participant
• be independent to any person connected to the scheme participant
• meet the requirements for ‘reasonable assurance engagements’ prescribed in in ISAE 3000 (R), or an equivalent standard

TheAs verifiera mustscheme participant you must:

• give your verifier the information they need to complete their viewwork
• send onthe whetherverifier’s the:
  assurance report and your annual fossil fuel boiler sales to the Environment Agency
  • methodssend usedthe supporting evidence for any excluded sales to collatethe Environment Agency

  For guidance on third party assurance, see CHMM: verifying annual fossil fuel boiler sales reports.

  Criteria for verification

  The CHMM regulations provide in Regulations 17(1)(c) and report17(1)(d), the informationkey forcriteria against which the annual fossil fuel boiler sales datareport and accompanying evidence are “capableto ofbe producingassessed. relevantThe dataverifier whichmay iswish freeto fromconsider materialthe misstatement”following (inquestions linewhen withconsidering ISAEthese 3000criteria:

  1. Does (R))the evidence show that the boiler sale took place during the scheme year?
  2. annualAre there clear processes to capture all applicable fossil fuel boiler sales dataas defined in the CHMM regulations, across all brands, models and supportinggroup evidenceentities comply,within “inthe corporate group, supported by appropriate evidence?
  3. Are all materialthe respects,excluded withsales backed up by suitable evidence which shows that the requirementsfossil fuel boiler was, or was to be, exported from the UK or installed in a new-build property?
  4. Are appropriate and sufficient procedures in place to ensure against double counting of thatfossil Regulation”fuel boiler sales reported as excluded?

Submitting an addendum report

You must not report fossil fuel boiler sales as excluded sales unless you can give yourevidence verifierfor this in the informationverified theyreport needyou submit by 30 June.

The collation of evidence may take considerable time, sometimes for sendingreasons beyond the control of the manufacturer. For example, a warranty application may not be made until several months after the boiler was first sold.

The Environment Agency will allow you to submit an addendum report if:

• the initial report, accompanied by a verifier’s assurance report and yourevidence annualfor excluded sales, was submitted by 30 June
• the addendum is accompanied by a verifier’s assurance report and evidence for any additional excluded sales, and
• the addendum is submitted before 30 August

The addendum should either be:

• a revised and updated version of the initial report
• a brief addendum which makes clear what changes have been made since the initial report

It is optional to submit an addendum report. If you submit one, this gives you a further 2 months to gather additional evidence.

The verifier must provide assurance for the revised data for qualifying and excluded fossil fuel boiler sales. The manufacturer must provide evidence for any additional excluded sales since the initial report.

If a boiler manufacturer or verifier identifies that fossil fuel boiler sales have been incorrectly reported as excluded after the submission of the verified initial report, they should:

• submit a revised report identifying and correcting the error
• describe in the revised report what steps have been taken to prevent the error from being repeated

The Environment Agency.Agency Youwill mustdecide alsowhether sendto accept the supportingadditional evidence forcontained anyin excludedan sales.addendum report.

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Power to estimate boiler sales data

The Environment Agency may work out (determine) your qualifying and excluded fossil fuel boiler sales if:

• you did not give an annual fossil fuel boiler sales data report
• they believe your fossil fuel boiler sales report is incorrect
• they believe the supporting evidence for excluded fossil fuel boiler sales is insufficient

You will be informed of the determination and your right to appeal.

If you become aware of an error after submitting your data, you must tell the Environment Agency. They will review the data and, if needed, update the the M-CHMM service service. If the error is important and relates to the annual sales data, they may request another verification report.

Maintain records and audits

You must:

• keep records of all data and information relevant to your your CHMM obligations obligations
• store data relating to each scheme year for at least 7 years after it ends
• keep other records relevant to to CHMM, such as company changes

The Environment Agency may ask to check this data at any time.

You may get a civil penalty if you do not keep records as required.

Low-carbon heat targets

Scheme participants will have a low-carbon heat target. These are based on a percentage of their qualifying fossil fuel boiler sales which exceed the threshold.

The The CHMM Regulations regulations give give the relevant percentages as follows.

Year 1 (2025 to 2026):(2025):

• 6% of the number of qualifying gas boiler sales greater than 19,999
• 6% of the number of qualifying oil boilers sales greater than 999

Year 2 (2026 to 2027):(2026):

• 8% of the number of qualifying gas boiler sales greater than 19,999
• 8% of the number of qualifying oil boilers sales greater than 999

The percentages for future scheme years are set by the Secretary of State.

The Environment Agency will calculate your low-carbon heat target after they:

• review your annual fossil fuel boiler sales report
• review your supporting evidence
• review the verifier’s assurance report
• resolve any queries

There will be a low-carbon heat target for each scheme year. This will be based on combined annual fossil fuel boilers sales above the threshold of 19,999 gas boilers and 999 oil boilers. This figure will be multiplied by the percentage. This is the number of CHMM credits that you will need to meet your low-carbon heat target.

Where the target is not a whole number, the Environment Agency will round this up or down to the nearest whole number.

Carry forward a low-carbon heat target

At the end of a scheme year (apart from 2028),the final year of the scheme), a scheme participant that does not have enough enough CHMM credits credits can carry forward part of its target to the next scheme year.

This may be up to the greater of:

• 35% of the number of units in the scheme participant’s low-carbon heat target for that scheme year
• 300, where 20,000 or more qualifying gas boilers were sold in that scheme year
• 50, where 1,000 or more qualifying oil boilers were sold in that scheme year

Any target that is carried forward must be met in the next scheme year, through either credit surrender or payment.

The Environment Agency will apply the maximum carry forward unless you specify a lower figure using the M-CHMM service.

Credits and payments

The The M-CHMM service service gives gives credits for certified retrofit installations of heat pumps. To lead to a a CHMM credit, credit, the installation must be recorded on a registry of the certification scheme.

The The Microgeneration Certification Scheme (MCS) is is the only approved certification scheme for the the CHMM. . MCS will will issue certificates, and these will appear in your your M-CHMM account account as as CHMM credits credits if they are eligible under the the CHMM Regulations. regulations.

The Environment Agency matches data on the the MCS installation installation database of certified installs with with M-CHMM accounts. accounts. You need to keep the Environment Agency up to date with the license holder names that apply to your heat pumps registered with with MCS.

You can view your credits in the the M-CHMM service service.

Getting a CHMM credit

You can get CHMM credits if you’re the manufacturer of a heat pump which certified by MCS as having been installed.

The qualifying installation of one standalone heat pump will lead to one CHMM credit. The qualifying installation of a hybrid heat pump will lead to half a CHMM credit.

Credit holders that want to trade CHMM credits must first register on the M-CHMM service.

Transferring credits

Scheme participants may not have enough enough CHMM credits credits to meet their low-carbon heat target. Other scheme participants or credit holders who are not participants may have a surplus of credits, and so may want to transfer credits to other participants.

Only scheme participants can get get CHMM credits credits through a credit transfer.

The The M-CHMM service service has has a list of parties who have shown an interest in transferring transferring CHMM credits. credits. This list is not exclusive, and parties don’t have to be on the list to transfer credits. The list is to help connect people.

You must complete the financial and contractual aspects of credit transfers outside of the the M-CHMM service. service. The Environment Agency will not be involved in this process. You must only transfer credits in the the M-CHMM service service after agreeing terms between the two2 parties.

The The CHMM credit credit transfer period for credit generation in a given scheme year is 1 October of that scheme year to 30 September of the year after.

Surrendering credits

Scheme participants must surrender credits by 1 October after each scheme year. There should be enough surrendered surrendered CHMM credits credits to meet your low-carbon heat target. One One CHMM credit credit is equal to one unit of the low-carbon heat target.

Carrying over credits

At the end of each scheme year, you can carry over some surplus surplus CHMM credits credits (those not surrendered or transferred) to the next scheme year.

A scheme participant can carry over up to 10% of the the CHMM credits credits held immediately before surrender.

A credit holder can carry over up to 10% of the the CHMM credits credits generated over the year.

The Environment Agency will always apply the maximum credit carry over, unless you inform us by 1 October after the relevant scheme year.

Credit expiry

On 1 October after the scheme year, year, CHMM credits credits will expire if you have not:

• used them to meet a low-carbon heat target
• carried them over to the next scheme year

Payments

If you do not have enough enough CHMM credits credits to meet the low-carbon heat target, including after applying any target carry forward, you will need to pay to cover the difference. You need to pay £500 for each unit of unmet target.

The Environment Agency will send you a notice showing the amount to pay, with instructions.

You will need to pay the Environment Agency (as scheme administrator) by 30 November after the end of the scheme year.

How to register

Register and report your data using the M-CHMM service.

How you’ll be regulated

Check how compliance, enforcement, and appeals work.

For help

Contact chmm@environment-agency.gov.uk if you’re unsure if the CHMM applies to you.