Heat pumps UK: when they save money, when they do not, and how to decide
Heat pumps can cut carbon and sometimes cut bills, but only when the property, grant, installer design and tariff line up.
Heat pumps can cut carbon and sometimes cut bills, but they are not automatically cheaper than gas in every UK home. The decision depends on the property, the grant, the installer design, the existing heating fuel and the electricity tariff behind the meter.
Data freshness note
Energy prices, grant levels and policy details were checked on 6 June 2026. Ofgem price cap figures change quarterly, and Boiler Upgrade Scheme rules can change. Always check current figures before making a spending decision.
For related reading, see our guides to air source heat pump costs UK, heat pump vs gas boiler, home insulation guide UK, smart thermostats and how to reduce your home energy bills.
The UK sold 125,037 heat pumps in 2025. That was a record, but still a long way from the government's target of 450,000 installations a year by 2030. The gap is not mainly about whether heat pumps work. They do. The harder question is whether a heat pump is the right next heating decision for a particular home.
In the right property, with the right system design and a good smart electricity tariff, a heat pump can deliver useful heat at around 5p per kilowatt-hour. In the wrong property, on a standard tariff, replacing a modern gas boiler can increase running costs. Both statements can be true at the same time.
This guide explains how heat pumps work, what they cost, when the economics make sense, when they do not, and what to ask an installer before committing thousands of pounds.
Quick answer
A heat pump is most likely to make financial sense if your home is reasonably insulated, has practical space for an outdoor unit and hot water setup, can run comfortably at lower flow temperatures, and you can access a strong grant or a smart time-of-use electricity tariff.
It is less likely to save money immediately if you are replacing a modern efficient gas boiler on a standard electricity tariff in a poorly insulated property.
The decision in one sentence
A heat pump is not just a boiler replacement. It is a whole-home heating design decision.
Should you install one now?
Use this first-pass scoring table before you ask for quotes. It is not a substitute for a proper room-by-room heat-loss survey, but it helps identify whether a heat pump is likely to be a strong candidate now or a better decision after other work.
| Question | Strong sign | Caution sign |
|---|---|---|
| What are you replacing? | Oil, liquefied petroleum gas (LPG), coal or direct electric heating | A modern efficient mains gas boiler |
| How well insulated is the home? | Loft and walls improved, few draughts, Energy Performance Certificate (EPC) C or close | Poor insulation, solid walls with no plan to improve them, EPC E or below |
| How old is the boiler? | Near end of life, unreliable or expensive to repair | Recently replaced and working efficiently |
| Can you use a smart tariff? | Smart meter installed or available, willingness to use time-of-use pricing | Standard tariff only, no smart meter access or no appetite for tariff management |
| Is there space? | Suitable outdoor unit location and space for a hot water cylinder | Flat, restricted outdoor space, no cylinder location, conservation constraints |
| Will you use the grant? | Eligible home and Microgeneration Certification Scheme (MCS) installer | Not eligible, or installer cannot claim the Boiler Upgrade Scheme (BUS) grant |
If most answers are in the strong-sign column, a heat pump is worth serious investigation now. If several are in the caution column, the better first step may be insulation, controls, radiator planning or waiting until the current boiler reaches end of life.
What a heat pump actually does
A heat pump does not generate heat by burning fuel. It moves heat from outside air, or from the ground, into the home using a refrigerant cycle. The same basic physics operates a fridge, but in reverse: instead of removing heat from a cold box, a heat pump extracts low-temperature heat outside and upgrades it into useful heat indoors.
Because it moves heat rather than creating heat from combustion, a heat pump can deliver more heat energy than it uses in electricity. This ratio is called the Coefficient of Performance (COP). A COP of 3.0 means the heat pump delivers 3 kilowatt-hours (kWh) of heat for every 1 kWh of electricity it uses.
The more important real-world number is the Seasonal Coefficient of Performance (SCOP). SCOP measures average performance across a heating season, including cold days when efficiency falls. A well-designed UK system might average 2.5 to 3.5. A poor installation running at unnecessarily high flow temperatures might achieve only 2.0 to 2.2. That difference matters a lot for running costs.
Air source and ground source
Most UK heat pump installations are air source heat pumps. They extract heat from outside air and are cheaper and easier to install than ground source systems. They can work in cold weather, although efficiency falls as outside temperature drops.
Ground source heat pumps extract heat from the ground through buried loops or boreholes. Ground temperature is more stable than air temperature, so performance can be more consistent, but installation is much more expensive and requires suitable land or borehole access.
For most households comparing a heat pump with a boiler replacement, the practical question is usually air source heat pump versus gas, oil or liquefied petroleum gas (LPG) heating.
Why electricity price matters
The efficiency advantage of a heat pump does not automatically translate into lower bills. Heat pumps run on electricity, and electricity costs much more per unit than gas in the UK.
At the Ofgem April-June 2026 price cap:
- Electricity was approximately 24.67p per kWh.
- Gas was approximately 5.74p per kWh.
- The electricity-to-gas unit price ratio was approximately 4.3:1.
That ratio is sometimes called the spark gap. It is one reason the UK heat pump market has grown more slowly than markets in countries where electricity is cheaper relative to gas.
For a heat pump to match gas on a standard tariff at those prices, it would need to deliver roughly 4.3 kWh of heat for every 1 kWh of electricity, meaning a SCOP of 4.3. That can happen in excellent conditions, but it is not a realistic full-season average for most existing UK homes.
Heat pump costs in 2026
A fully installed air source heat pump commonly costs between GBP 8,000 and GBP 14,000 before any grant for a typical UK property. Boiler Upgrade Scheme data puts the median installed cost for air source systems at approximately GBP 13,002. Ground source systems are usually much more expensive, often in the GBP 20,000 to GBP 35,000 range.
The Boiler Upgrade Scheme currently provides:
- Air source heat pump: GBP 7,500 grant.
- Ground source heat pump: GBP 7,500 grant.
- Air-to-air heat pump: GBP 2,500 grant.
- Heat battery: GBP 2,500 grant.
From 21 July 2026, some eligible off-gas-grid homes replacing oil or LPG heating may qualify for a GBP 9,000 air source heat pump grant. Off-gas-grid homes replacing coal or direct electric heating are listed separately in the grant notice at GBP 7,500 for air-to-water systems. The enhanced GBP 9,000 grant is not yet in effect as of the date of this article.
After the standard GBP 7,500 grant, many homeowners replacing a gas or oil system pay roughly GBP 500 to GBP 6,500 for an air source heat pump installation, but the actual figure depends on the property. A simple install in a suitable home can be much cheaper than a difficult retrofit requiring radiator, cylinder, pipework and electrical upgrades.
Costs often missing from headline quotes
Headline figures often focus on the heat pump unit. A real installation can involve more.
| Cost area | Why it matters | Typical issue |
|---|---|---|
| Hot water cylinder | Many combi boiler homes need stored hot water again. | Space, cylinder size and recovery time need planning. |
| Radiator upgrades | Heat pumps work best at lower flow temperatures. | Small radiators may need replacing with larger ones. |
| Electrical work | Older homes may need consumer-unit or circuit changes. | Some quotes exclude electrical upgrades. |
| Insulation | A leaky home needs more heat and a larger system. | Insulation is separate from the heat pump grant. |
| Controls and commissioning | Performance depends on setup, not just hardware. | Poor settings can make a good system expensive to run. |
A realistic prepared-home installation might still sit close to the post-grant low end. A home needing major upgrades can cost several thousand pounds more. That does not mean the heat pump is a bad idea, but it means the project should be treated as a heating-system redesign.
Running costs versus gas, oil, LPG and direct electric
This is where heat pump guides often become too optimistic. The honest comparison depends on the fuel being replaced and the tariff used.
The figures below use the Ofgem April-June 2026 price cap and an illustrative heat pump SCOP of 2.9. They are simplified examples. Standing charges, hot water use, system design, weather and tariff eligibility all affect the real result.
| Heating setup | Key assumption | Approximate useful heat cost |
|---|---|---|
| Modern gas boiler | 5.74p/kWh gas, 90% efficient | 6.4p per kWh of heat |
| Heat pump on standard electricity tariff | 24.67p/kWh electricity, SCOP 2.9 | 8.5p per kWh of heat |
| Heat pump on smart time-of-use tariff | 14.53p/kWh off-peak electricity, SCOP 2.9 | 5.0p per kWh of heat |
| Oil boiler | Approx. 8-9p/kWh oil, 90% efficient | Approx. 9-10p per kWh of heat |
| LPG boiler | Approx. 9-11p/kWh LPG, 90% efficient | Approx. 10-12p per kWh of heat |
| Direct electric heating | 24.67p/kWh electricity, 100% efficient | 24.7p per kWh of heat |
The table shows why the answer is different for different homes. Replacing a modern gas boiler on a standard electricity tariff does not usually save money on running costs at current price-cap rates. Gas wins, and not narrowly. Replacing oil, LPG or direct electric heating is a much stronger case because those fuels are more expensive per unit of useful heat.
The tariff also changes the picture. A heat pump running largely on a dedicated smart tariff can be cheaper than gas. Two homes with the same heat pump can have very different annual bills if one uses a standard tariff and the other shifts heating and hot water into cheaper periods.
Three worked examples
The examples below are simplified, but they show why there is no single heat-pump answer for every UK home.
| Household | Likely economics | Verdict |
|---|---|---|
| Modern gas boiler in a semi-detached home | The grant reduces upfront cost, but running costs may rise on a standard tariff. A smart tariff, good insulation and low flow temperature are important. | Investigate, but do not assume immediate bill savings. |
| Rural detached house on oil heating | Higher existing fuel cost makes the running-cost case stronger. From 21 July 2026, some oil-heated off-gas-grid homes may also qualify for the enhanced grant. | Strong candidate if insulation and system design are suitable. |
| Small home using direct electric heating | A heat pump can deliver several times more heat from the same electricity input. Space and noise constraints may be the bigger issues. | Potentially very strong, but check property constraints carefully. |
The useful question is not "are heat pumps cheaper?" It is "cheaper than what, in which property, on which tariff, after which grant?"
When a heat pump makes sense now
The strongest cases are the homes where the current heating system is expensive, old or carbon-intensive, and where the building can run comfortably at lower flow temperatures.
Off-gas-grid properties replacing oil, LPG or direct electric heating. The running cost saving can be immediate and significant on most tariffs. The forthcoming enhanced GBP 9,000 grant from 21 July 2026 strengthens the case further for eligible oil and LPG replacement properties.
Homes already planning significant retrofit work. If a major renovation is already budgeted, including new radiators, insulation or a hot water system, the marginal cost of adding a heat pump can be lower than doing it as a separate standalone project later.
Well-insulated properties with space for a cylinder. These homes can achieve higher real-world SCOPs, reducing the gap with gas on a standard tariff and removing it on a smart tariff.
Properties with underfloor heating. Underfloor heating runs at low flow temperatures and is a good match for heat pump output.
New homes built under the Future Homes Standard. The Future Homes Standard was laid in Parliament in March 2026 and is due to apply from 2027, subject to transitional arrangements. New homes built under the standard will increasingly be designed around low-carbon heating, with heat pumps expected to be one of the main compliance routes.
When to wait
Waiting can be rational. A heat pump is a long-term upgrade, not a badge of virtue.
Poor insulation with no plan to improve it. A heat pump installed in a draughty home will run harder, achieve lower efficiency, cost more to run and may require a larger system. Insulating first can be the better sequence.
A recently replaced modern gas boiler. If the boiler is new, efficient and low-maintenance, the running-cost case for immediate replacement is weak on a standard tariff. Waiting until the boiler approaches end of life may be more financially rational.
No practical outdoor unit location. Air source heat pumps need outdoor airflow and sensible placement. Flats, back-to-back terraces and conservation-area homes can face real constraints.
No space for a hot water cylinder. Replacing a combi boiler often means finding space for stored hot water. Compact cylinders exist, but the issue must be solved before installation.
A quote based on assumptions rather than a heat-loss survey. Any installer offering a firm system design without a room-by-room heat-loss calculation is guessing. Walk away.
Good quote versus bad quote
The installer matters as much as the equipment. A good heat pump quote explains the heating design. A weak quote mainly sells the box.
| Quote detail | Good sign | Red flag |
|---|---|---|
| Heat-loss calculation | Room-by-room figures, assumptions shown clearly | Estimate based mainly on house size or bedroom count |
| Flow temperature | Designed around lower flow temperatures where possible | High-temperature design with no explanation of efficiency impact |
| Radiators | Specific list of radiators that need changing and why | Vague line saying radiator upgrades may be needed later |
| Hot water | Cylinder size, location and recovery assumptions explained | Hot water treated as an afterthought |
| Running costs | Standard tariff and smart tariff examples shown separately | Promised savings without stating tariff, SCOP or gas comparison |
| Aftercare | Commissioning, handover and follow-up process included | No clear plan if comfort or performance disappoints |
What to ask an installer
Before accepting any quote, ask these questions. A good installer should welcome them. Boiler Upgrade Scheme grant claims need an installer registered under the Microgeneration Certification Scheme (MCS), so certification is not a minor admin detail.
- Have you completed a room-by-room heat-loss calculation for the whole property?
- What flow temperature is the system designed to operate at?
- What SCOP are you assuming in your running-cost estimate, and what is that based on?
- Which radiators need changing, and which do not?
- What hot water cylinder are you recommending and why?
- What will the total system cost be before and after the grant?
- What electricity tariff are you assuming in any running-cost projection?
- Are you MCS certified?
- What is your process if the system does not deliver adequate comfort?
The key test is specificity. If the answer is vague, the quote probably is too.
Decision flow
If you want a simple order of decision-making, use this flow.
| Step | Question | If yes | If no |
|---|---|---|---|
| 1 | Are you replacing oil, LPG, coal or direct electric heating? | Heat pump case is likely strong. Check grant and property suitability. | Move to the gas-boiler question. |
| 2 | Is your gas boiler old or near replacement? | Compare heat pump quote with boiler replacement and tariff options. | Waiting may be sensible unless the home is already heat-pump ready. |
| 3 | Is the home reasonably insulated? | Proceed to heat-loss survey. | Improve insulation first, then size the system properly. |
| 4 | Can you use a smart tariff? | Running-cost case improves materially. | Be cautious if replacing gas on standard electricity. |
| 5 | Does the installer give a proper design? | Compare quotes and check aftercare. | Do not proceed until the design is credible. |
Policy, grants and the UK market
The Boiler Upgrade Scheme has been extended to 2030 with a budget of GBP 625 million for 2026/27, up from GBP 295 million in 2025/26. The grant is paid to the installer, who deducts it from the quote.
To qualify for the Boiler Upgrade Scheme, you must own the property and be replacing a fossil fuel heating system such as gas, oil, electric or LPG. The installer must be MCS certified. The scheme covers England and Wales. Scotland and Northern Ireland have separate arrangements.
The Warm Homes Plan sets a target of 450,000 heat pump installations per year by 2030. The UK sold 125,037 heat pumps in 2025, a record, but still below the annual installation level implied by the target. Moving from roughly 125,000 annual sales to 450,000 annual installations requires a major acceleration across supply chains, consumer demand and installer capacity.
The current government position is a target to phase out the installation of new natural gas boilers by 2035. This is a policy target, not a ban on existing gas boilers continuing to operate. The Clean Heat Market Mechanism is intended to push boiler manufacturers toward a rising share of low-carbon heating sales, while the Future Homes Standard is designed to move new homes away from fossil-fuel heating as building regulations change.
FAQ
Are heat pumps cheaper than gas in the UK?
Not always. On a standard electricity tariff, a heat pump replacing a modern gas boiler can cost more to run at current price-cap rates. A heat pump can be cheaper than gas if it performs well and uses a suitable smart time-of-use tariff.
How much does a heat pump cost after the grant?
Many air source heat pump installations cost roughly GBP 500 to GBP 6,500 after the standard GBP 7,500 Boiler Upgrade Scheme grant, but difficult properties can cost more. The quote depends on radiators, cylinder work, electrical upgrades, insulation and system design.
Do heat pumps work in cold weather?
Yes. Air source heat pumps can work in cold weather, but efficiency falls as outside temperature drops. That is why system sizing, flow temperature and heat-loss calculations matter.
Do I need new radiators?
Possibly. Heat pumps usually work best at lower flow temperatures, so some homes need larger radiators to deliver the same comfort. A room-by-room heat-loss calculation should identify which radiators need changing.
Do I need insulation first?
Not always, but insulation often improves the case. A poorly insulated home needs more heat, which can mean a larger heat pump, higher running costs and lower comfort. In many homes, insulation should come before installation.
Can a heat pump replace a combi boiler?
Yes, but most heat pump systems use stored hot water, so a home with a combi boiler usually needs a hot water cylinder. Space for the cylinder is one of the main practical checks.
Is the Boiler Upgrade Scheme paid to me?
No. The Boiler Upgrade Scheme grant is handled through the installer and deducted from the quote. You do not normally receive the grant money directly.
Verdict
A heat pump is not automatically the cheapest heating choice for a UK home in 2026. On a standard electricity tariff, replacing a gas boiler with a heat pump currently costs more to run, not less. The grant reduces the upfront cost gap, but it does not make every home a good candidate.
The honest cases are more specific. If you are on oil, LPG or direct electric heating, the running-cost case is strong. If you are replacing gas in a well-insulated home and can use a smart time-of-use tariff, the running-cost case can also be strong. If you are already planning a major retrofit, the timing may be right to include a heat pump in that work.
The mistake is treating this as a simple product purchase. The right sequence is: assess insulation and heat loss first, get a proper heat-loss survey from an MCS-certified installer, understand the tariff options available to you, and only then decide whether a heat pump is the right choice now or a better choice in two or three years.
The technology works. The economics depend on your home, your tariff and your timing.
Useful source links
- GOV.UK: Boiler Upgrade Scheme eligibility
- GOV.UK: BUS grant categories and grant values
- GOV.UK: Warm Homes Plan
- GOV.UK: Future Homes Standard
- Ofgem: Energy price cap
- MCS: Find a certified installer
- Nesta: Four years of the Boiler Upgrade Scheme in four charts
- DESNZ: Heat pump deployment statistics
- Energy Saving Trust: heat pumps
- Heat Pump Association: UK market data
The Planet Brief covers home energy, sustainable technology and UK climate policy. For related reading, see our guides to air source heat pump costs UK, heat pump vs gas boiler, home insulation UK and smart thermostats.