Energy costs that take up a large share of household income create a different kind of financial pressure from most other household bills: heating and power are not discretionary. The widely-used benchmark for energy affordability is whether a household spends more than 10% of its income on energy. On current UK average energy bills, a household with an income below around £18,000 per year is likely to exceed that threshold on a typical bill alone. For households in older or poorly-insulated properties, the equivalent threshold income is higher still.
This calculator shows what proportion of your estimated household income goes on energy, which improvements would reduce your bills most significantly, and which support schemes may be relevant to your situation. It is a planning tool, not a formal assessment. The 10% benchmark is widely used but not the official government measure of fuel poverty, which uses a more complex methodology. If you are currently struggling to pay energy bills, free support is available: see the support section below the calculator. All figures are illustrative estimates, and the information is general and does not constitute financial or benefit advice.
At a Glance
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The widely-used fuel poverty benchmark is 10% of household income spent on energy, though this is not the official government measure.
A household spending £1,800 per year on energy needs an income above £18,000 to stay below this threshold. The official measure (Low Income Low Energy Efficiency, or LILEE) uses a more complex methodology based on modelled energy costs and residual income after housing and energy needs are met, but the 10% figure gives a practical indication of whether energy costs are creating significant financial pressure. The calculator shows where your household sits on this simpler benchmark.
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Insulation improvements typically produce the largest bill reductions for the lowest cost, and are also the most likely to be grant-funded.
Loft and cavity wall insulation can reduce annual energy bills by £200 to £600 per year for properties where neither has been done, at a cost of £400 to £1,500 each before grant funding. For lower-income households, the priority is usually the improvement with the highest saving per pound spent rather than the highest absolute saving: an improvement returning £400 per year at £600 cost is more valuable in affordability terms than one returning £600 at £10,000.
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ECO4 and the Great British Insulation Scheme may fund insulation and heating upgrades free for eligible households.
ECO4 covers properties rated EPC E, F, or G where occupants receive qualifying benefits or have low incomes, and can include insulation, heat pumps, and in some cases solar panels. The Great British Insulation Scheme covers a single insulation measure for properties rated EPC D or below, with broader eligibility than ECO4. Both are applied for via energy suppliers or the Simple Energy Advice service, and grant eligibility should be checked before any consideration of borrowing for the same improvements.
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If you are struggling to pay energy bills now, contact your supplier first and ask about repayment plans and hardship funds.
Energy suppliers are required by Ofgem to offer payment plans for customers in difficulty, and many operate hardship funds that provide additional support beyond the standard schemes. The Warm Home Discount provides a £150 reduction off electricity bills each winter for eligible households. None of this affects credit scores, and Citizens Advice (0800 144 8848, free) provides confidential advice on energy debt and benefit entitlements that may be available before any borrowing is considered.
Home energy cost and affordability calculator
Enter your approximate household income band and current energy bill to see what proportion of income goes on energy, and which improvements would reduce that proportion most. All figures are illustrative estimates. This is not a formal fuel poverty assessment.
If you are struggling to pay energy bills right now
Contact your energy supplier directly: they are required to offer payment plans and have hardship funds available. Citizens Advice (0800 144 8848, free) provides confidential advice on energy debt and benefit entitlements. This does not affect your credit score.
Approximate household income (before tax, including benefits)
Select the band that best describes your total household income. This is used only to calculate the proportion your energy bill represents and is not stored or transmitted.
Your property and energy bills
Support Schemes That May Help
Several government schemes and supplier obligations provide support specifically for households with high energy costs relative to income, or for households in properties with poor energy efficiency. The availability, eligibility criteria, and funding levels of all these schemes change over time. The most current information for each scheme is on the government’s Simple Energy Advice service at simpleenergyadvice.org.uk, which also provides free personalised advice on improvements and grant eligibility.
Grant scheme
ECO4 (Energy Company Obligation)
Requires larger energy suppliers to fund insulation and heating upgrades for households in properties rated EPC E, F, or G, where the occupants receive qualifying benefits or have low incomes. Measures include insulation, heat pumps, and in some cases solar panels. Eligibility is assessed by an energy supplier or local authority referral under the ECO4 Flex route. Apply via your energy supplier or through the government’s Simple Energy Advice service. Fully funded: no cost to the household if eligible.
Grant scheme
Great British Insulation Scheme (GBIS)
Covers a single insulation measure (typically loft or cavity wall insulation) for households in properties rated EPC D or below. Broader eligibility than ECO4 and not restricted to means-tested benefit recipients, though lower-income households are prioritised. Applied for via energy suppliers and local authorities. Check current eligibility and availability via the Simple Energy Advice service or gov.uk.
Bill support
Warm Home Discount Scheme
Provides a £150 discount off electricity bills for eligible households each winter. Core Group eligibility is automatic for households receiving Pension Credit Guarantee Credit (suppliers contact these households directly). Broader Group eligibility covers other low-income households and is applied for via the gov.uk Warm Home Discount application. The discount is applied directly to the electricity account, not paid as cash.
Supplier support
Energy supplier hardship funds and payment plans
All energy suppliers are required under Ofgem rules to offer payment plans for customers struggling to pay their bills, and many operate hardship funds that provide grants or credits for customers in severe financial difficulty. These are separate from government schemes and do not require a formal benefits assessment. Contact your supplier directly and ask for their Priority Services Register and hardship fund. The Priority Services Register also provides additional protections such as priority reconnection and quarterly meter readings.
Free independent advice on energy costs and improvements: The Simple Energy Advice service (simpleenergyadvice.org.uk) provides free personalised advice on energy efficiency improvements, grant eligibility, and support schemes. Citizens Advice (0800 144 8848, free from landlines and mobiles) provides confidential advice on energy debt, benefit entitlements, and how to deal with energy suppliers. Neither service shares information with lenders or affects credit scores.
Why Energy Efficiency Matters More at Lower Incomes
The financial impact of a poorly-insulated property falls hardest on households with lower incomes, for two reasons. First, energy bills represent a higher proportion of total income: a £1,800 annual bill represents 12% of a £15,000 household income but only 3.6% of a £50,000 income. Second, households with lower incomes often have less flexibility to reduce usage through behaviour changes alone: turning the heating down to an uncomfortable level to reduce bills is a form of cost that does not appear in the bill figure but is a real reduction in wellbeing.
This is why the sequencing of energy improvements matters differently for lower-income households than for higher-income ones. For a household where bills already represent 15% of income, the priority is the improvements that produce the largest bill reduction in absolute terms for the lowest cost, which is almost always insulation. The improvement that saves £400 per year at a cost of £600 is more valuable, in the context of affordability, than the improvement that saves £600 per year at a cost of £10,000, even though the latter has a better absolute return. The calculator orders improvements by annual saving per pound of cost to reflect this priority.
Related Tools and Guides
Tool
Shows the recommended order of improvements by financial return for your property profile. For households focused on reducing bills as a proportion of income, the sequencer prioritises the improvements with the highest annual saving per pound spent.
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Energy efficiency loan payback calculator
If grant funding does not cover the full cost of improvements, this calculator shows when cumulative energy savings overtake the loan interest cost. Useful for assessing whether a small unsecured loan for insulation works is affordable relative to the bill saving it produces.
Guide
Government grants vs home improvement loans
Covers ECO4, the Great British Insulation Scheme, and the Boiler Upgrade Scheme in detail. Essential reading before deciding whether a loan is necessary, as grant funding may cover the full cost for eligible households.
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Home improvement loans for energy efficiency upgrades
Covers all the main energy efficiency improvements, their cost ranges, saving profiles, and loan type guidance. Particularly relevant for households where grant funding covers part of the cost and a loan is needed for the balance.
Not sure what to look at next?
All of our home improvement loan guides and tools in one placeFrequently Asked Questions
What is the official definition of fuel poverty and how does this calculator relate to it?
The official government measure of fuel poverty in England is the Low Income Low Energy Efficiency (LILEE) indicator, which defines a household as fuel poor if it has a below-average energy efficiency rating and, after meeting its energy needs, has a residual income below the poverty line. This methodology uses modelled energy costs based on the property’s physical characteristics rather than actual bills, and requires detailed income and benefit data to assess accurately.
This calculator uses the widely-cited 10% of income benchmark, which is simpler and more accessible than the official methodology but less precise. It gives a practical indication of whether energy costs represent a significant financial burden, not a formal determination of fuel poverty status. If you believe you may be in fuel poverty, the most useful next step is to contact the Simple Energy Advice service or Citizens Advice, who can provide a proper assessment and identify all available support. Formal fuel poverty status affects eligibility for some support programmes, but many schemes have broader eligibility criteria that do not depend on a formal assessment.
I am a private tenant and my landlord is responsible for the property. What can I do?
Private tenants in England and Wales have legal protections under the Minimum Energy Efficiency Standards: a landlord cannot legally rent a property with an EPC rating below E. If your property is rated F or G, your landlord is in breach of MEES regulations. You can report this to your local authority, which has enforcement powers. As a tenant, you cannot carry out structural improvements yourself, but you can request that your landlord makes improvements. If the landlord refuses, the local authority can compel improvements in some circumstances.
For improvements under the ECO4 scheme, the landlord’s permission is required for the works to be carried out, but the cost is covered by the scheme rather than the landlord. If you receive qualifying benefits and live in an EPC E, F, or G property, approaching your energy supplier about ECO4 eligibility may result in free improvements being offered, for which you would need the landlord’s agreement but not their financial contribution. Citizens Advice can advise on your rights as a tenant in this situation and how to approach a landlord about energy efficiency works.
The calculator suggests improvements that would cost more than I can afford. What should I do?
The calculator shows all applicable improvements regardless of whether they are affordable for any specific household: its purpose is to show the full potential bill reduction. The first step is to check grant eligibility through the Simple Energy Advice service or your energy supplier, as some or all of the highest-impact improvements may be available free for eligible households. For insulation measures in particular, ECO4 and the Great British Insulation Scheme cover the full cost for eligible households at no charge.
If grant funding does not cover the full scope of improvements needed, a small unsecured loan for lower-cost measures such as loft or cavity wall insulation may produce a bill saving that exceeds the monthly loan repayment from the first payment. The energy efficiency payback calculator on this site models that comparison. For households where all improvement options feel unaffordable, the priority is to access the bill support schemes (Warm Home Discount, supplier hardship funds) and to contact Citizens Advice about all available benefit entitlements before considering any borrowing.
Does this calculator store my income information?
No. All calculations in this tool are performed in your browser using the information you enter into the sliders. Nothing is transmitted to Squared Money’s servers, stored, or used for any other purpose. The income band you select is used only to calculate the proportion of income represented by your energy bill, and is discarded when you leave the page. We do not ask for your name, address, or any identifying information as part of this calculator.
If you proceed to check eligibility for a home improvement loan by clicking the “Check eligibility” button, you will be directed to a separate loan enquiry process where the information you provide is handled in accordance with Squared Money’s privacy policy. The income information entered in this calculator is not carried forward to the loan enquiry process.
Squaring Up
Energy costs that take up more than 10% of household income create real financial pressure, and the most direct way to reduce that pressure permanently is to reduce the energy the property needs to stay warm and functional. For households in older or poorly-insulated properties, the improvements that make the biggest difference (loft and cavity wall insulation) are also the ones most likely to be available free through ECO4 or the Great British Insulation Scheme. Checking grant eligibility should come before any consideration of borrowing.
Where grant funding does not cover the full improvement cost, a modest loan for insulation works can produce a bill saving that exceeds the monthly repayment, making the loan net-positive from the first payment. But for households where current bills are already a significant burden, the bill support schemes available through energy suppliers and the government are the right first step, not additional borrowing. The free advice lines listed above can help identify everything that is available before any financial commitment is made.
Continue your research
Guides, calculators, and comparators covering every aspect of home improvement finance Explore guides and toolsThis tool is for illustrative purposes only and does not constitute financial, benefit, or energy advice, and does not constitute a formal fuel poverty assessment. The 10% of income benchmark used in this tool is a widely-cited heuristic and is not the official government measure of fuel poverty. All improvement cost and saving figures are illustrative UK averages. Grant eligibility is indicated based on EPC rating and income band only and is not a determination of actual eligibility. If you are struggling to pay energy bills, contact Citizens Advice on 0800 144 8848 (free, confidential) or your energy supplier’s customer services team. Your home may be at risk if you do not keep up repayments on a secured loan.
