Rates and data last verified 4 October 2026 by the ExpertSure editorial team. Sources are listed in the methodology below the calculator.
Air source heat pumps cost significantly less to run than many homeowners expect, with a typical UK household spending £800 to £1,100 per year on heating with an ASHP compared to £900 to £1,200 for a gas boiler, even though electricity costs about 26p per kWh against 8p for gas. The reason heat pumps compete on cost despite dearer fuel is their coefficient of performance — a well-installed ASHP delivers 2.5 to 3.5 kWh of heat for every 1 kWh of electricity consumed, effectively reducing the real cost per unit of heat to 7p to 10p.
The Boiler Upgrade Scheme currently offers a £7,500 government grant towards installation, bringing the net cost of a typical air source system to £4,500 to £6,000 after the subsidy. This calculator compares your estimated annual running costs for a heat pump against your current heating system, factoring in your property type, current heating system, heat pump efficiency and the BUS grant.
FREE QUOTE COMPARISON
Compare Heat Pump Quotes from Trusted Suppliers
✓ £7,500 BUS grant available
100% free • No obligation • Takes under 2 minutes
- A COP 3.0 heat pump costs about £1,053 a year for 12,000 kWh of heat - against £1,275 for an old 75% gas boiler at October to December 2026 Ofgem rates
- Against a new 90% boiler it is close to level - 8.49p against 8.86p per kWh of heat at COP 3.1
- Electricity carries no VAT until 31 March 2027 - with 5% added back, the COP 3.1 figure rises to 8.91p and the new boiler edges ahead
- Oil, LPG and direct electric show the biggest gains - a COP 3.1 heat pump uses 68% less electricity than direct electric heating
- The £7,500 BUS grant runs to 2030 - it is the largest single factor in payback
How to Use This Calculator
Choose your property type. The calculator uses it to estimate your annual heat demand in kWh.
Select your current heating system (new or old gas boiler, oil, LPG, direct electric or storage heaters) so the calculator can compare running costs against a heat pump.
Enter your current annual heating bill, or 0 to let the calculator estimate it from typical heat demand. Then pick a heat pump efficiency (COP) and say whether you can claim the BUS grant.
Review the annual running cost comparison between your current system and an air source heat pump, including the estimated payback period after accounting for the BUS grant.
At Ofgem October to December 2026 rates, a heat pump at COP 3.0 costs about £1,053 a year to supply 12,000 kWh of heat, against about £1,275 for an old gas boiler at 75% efficiency. Part of that lead comes from electricity carrying no VAT until 31 March 2027. Against a new 90% boiler the two are close to level. A higher COP, an off-peak tariff or the £7,500 BUS grant all improve the payback.
Heat Pump Running Costs vs Gas Boiler (2026 Rates)
At Ofgem October to December 2026 rates (electricity 26.32p/kWh, gas 7.97p/kWh), a heat pump with COP 3.1 produces heat for about 8.49p per kWh, against 10.63p for a 75%-efficient old gas boiler and 8.86p for a new 90% boiler. Gas rose 8.7% this quarter while electricity barely moved, and electricity is VAT-free until 31 March 2027.
The economics of heat pumps are more nuanced than many comparisons suggest. A heat pump running at COP 3.1 converts 1 kWh of electricity into 3.1 kWh of heat — making its effective heat cost 26.32p ÷ 3.1 = 8.49p per kWh of heat. An old gas boiler at 75% efficiency delivers heat at 7.97p ÷ 0.75 = 10.63p per kWh of heat.
At current rates a heat pump beats an old gas boiler per unit of heat, and the lead grows with an efficient pump (COP 3.8 = 6.93p/kWh). Against direct electric heating (26.32p/kWh, with no COP benefit) the saving is bigger still. Add 5% VAT back to electricity, as is due from April 2027, and a COP 3.1 heat pump’s heat costs 8.91p, a fraction above a new 90% boiler.
What Is COP and Why Does It Matter?
COP (Coefficient of Performance) is the ratio of heat output to electricity input. A COP of 3.1 means 1 kWh of electricity produces 3.1 kWh of heat. The UK average installed ASHP achieves around COP 3.1, but well-insulated homes with modern units can reach COP 3.8 or higher.
COP varies significantly depending on:
- Outdoor temperature: COP drops in cold weather. UK heat pumps are tested at −7°C to +7°C, with real-world UK winter performance typically between COP 2.5–3.5
- Flow temperature: Lower flow temperatures (35–45°C for underfloor heating) give higher COP than high-temperature systems (60°C+ for older radiators)
- Insulation quality: A well-insulated home needs less heat output, allowing the pump to run at more efficient low-temperature settings
- Equipment quality: Premium inverter-driven compressors maintain higher COP across a wider temperature range
Before installing a heat pump, a heat loss survey will determine whether your home needs radiator upgrades or insulation improvements to achieve a good COP. This is part of any reputable MCS-certified installer assessment.
The £7,500 Boiler Upgrade Scheme (BUS) Grant
The Boiler Upgrade Scheme provides a £7,500 grant for air-to-water heat pump installations in England, extended to 2030 by SI 2026/390. The grant goes directly to the installer and is deducted from your quote — you pay the net price upfront. Scotland, Wales, and Northern Ireland have separate schemes.
Key BUS grant eligibility rules:
- England only for this grant (Scotland has the Home Energy Scotland programme; Wales has Nest/Warmer Homes)
- Existing property — not available for new builds
- Replacing a fossil fuel system (gas, oil, or LPG boiler)
- MCS-certified installer required — you cannot apply directly; the installer claims on your behalf
- No EPC needed since 28 April 2026, when SI 2026/390 removed the Energy Performance Certificate requirement
The grant takes the average installed cost of about £12,000 down to a typical £4,500–£6,000 for most homes. With the BUS grant, the total cost proposition improves significantly — particularly when replacing oil or LPG heating where annual fuel savings are larger.
Best and Worst Cases for Heat Pump Economics
Heat pumps make the strongest economic case when replacing oil, LPG, or direct electric heating. The case vs a new gas boiler is marginal at current prices but improves if you benefit from time-of-use tariffs (charging overnight at 7–10p/kWh) or add solar panels.
Best case (strong economics):
- Replacing oil or LPG heating (fuel costs 7.5–9p/kWh — similar to or above heat pump effective cost)
- Replacing direct electric heating (immediate running cost saving of 65%+)
- Well-insulated home achieving COP 3.5+ with Agile/off-peak tariff at 7–10p/kWh
- BUS grant eligible (reduces payback by 3–6 years)
Marginal case (careful analysis needed):
- Replacing a new, efficient gas boiler (A-rated, 90% efficient)
- Poorly insulated detached house requiring significant radiator upgrades
- On standard electricity tariff only (no time-of-use benefit)
Heat Pump Running Costs by Property Size
The table compares estimated annual running costs for air source heat pumps vs gas boilers at Ofgem October to December 2026 rates (electricity 26.32p/kWh, gas 7.97p/kWh). At these rates and COP 3.0, a heat pump costs less to run than a 75%-efficient gas boiler in every property size.
| Property | Heat Demand (kWh) | ASHP Cost/yr | Gas Boiler/yr | Difference |
|---|---|---|---|---|
| 1-bed flat | 5,000 | £439 | £531 | HP saves £93 |
| 2-bed terrace | 8,000 | £702 | £850 | HP saves £148 |
| 3-bed semi | 12,000 | £1,053 | £1,275 | HP saves £222 |
| 3-bed detached | 15,000 | £1,316 | £1,594 | HP saves £278 |
| 4-bed detached | 20,000 | £1,755 | £2,125 | HP saves £371 |
| 5-bed detached | 25,000 | £2,193 | £2,657 | HP saves £463 |
Source: Energy Saving Trust, Ofgem October to December 2026 price cap (electricity 26.32p/kWh with no VAT until 31 March 2027, gas 7.97p/kWh). ASHP COP 3.0, gas boiler 75% efficiency, unit costs only (no standing charges). At COP 3.5+ or off-peak tariffs (7–10p/kWh) the heat pump’s lead grows.
Related Calculators
Explore our other free business calculators:
- Solar Panel Savings Calculator — Calculate solar panel ROI
- Boiler Running Cost Calculator — Compare boiler running costs
- Business Energy Calculator — Estimate energy costs
