£1200 is a bit lean for an engine swap, unless you're experienced and plan to do all the work yourself.
If by "my heads just gone" you mean a head gasket failure, a DIY fix can be fairly easy and cheap.
If the head is straight enough, a skim will cost you £50-100, new gaskets and head bolts £60. If the head is cracked, someone on here will sell you a replacement for £100-200. Either way, you'll be rolling again for under £300, plus some work.
The other £900 would go a long way toward turbocharging your M20B25
