At current UK energy prices, a heat pump and a new, efficient gas boiler cost similar amounts to run. On our figures the heat pump is between about £20 and £120 a year cheaper, depending on whether the boiler matches its 92% rating or runs at the 84% the government assumes in real homes, and only while electricity carries no VAT.
Where a heat pump wins decisively is against everything else: an old boiler, oil, LPG, or electric storage heating. Against oil it saves roughly £330 to £590 a year, depending on the heating oil price, and the savings against LPG and electric storage heating are larger again. Which system you are replacing matters far more than which system you are buying. If you are weighing a plain electric boiler instead, an electric boiler costs about 2.8 times as much to run as gas at the current price cap.
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- Against a new A-rated gas boiler, a heat pump costs roughly £20 to £120/year less to run - £20 if the boiler hits its 92% rating, £120 at the 84% real-world figure, using Ofgem October to December 2026 rates, a seasonal efficiency of 3.1 and VAT-free electricity until 31 March 2027
- Against an old G-rated boiler it saves around £345/year - and roughly £330 to £590 against oil, depending on the oil price, with larger savings again against LPG and electric storage heating
- Efficiency is the whole argument: break-even is a seasonal performance factor of 2.77 to 3.04 - below that gas wins on running cost, above 3.5 the heat pump is clearly ahead
- The £7,500 grant is what makes the sums work - installation runs £7,000 to £13,500, with a typical net cost of roughly £4,500 to £6,000 after the Boiler Upgrade Scheme
- A heat pump lasts about 20 years against 10 to 15 for a boiler - which changes the comparison once replacement cycles are counted
Running Costs: Heat Pump vs Gas Boiler
The comparison turns on one thing: electricity costs roughly three times more than gas per unit, but a heat pump delivers roughly three times more heat per unit than a boiler delivers. Those two multipliers very nearly cancel out, which is why the answer is close rather than obvious.
Working from the Ofgem price cap for 1 October to 31 December 2026, with electricity at 26.32p per kWh and an assumed seasonal efficiency of 3.1, a heat pump delivers heat at about 8.49p per kWh. A new gas boiler at 92% efficiency, with gas at 7.97p per kWh, delivers heat at about 8.66p; at the 84% in-situ efficiency the government assumes for real homes, it delivers heat at about 9.49p.
Ofgem states there is no VAT on electricity from 1 October 2026 to 31 March 2027, so these rates cannot be compared directly with earlier periods; gas still includes 5% VAT. On our arithmetic, adding 5% VAT back to the same electricity rate would put the heat pump about £30 a year behind the new boiler again.
| What you are replacing | Annual difference with a heat pump |
|---|---|
| New A-rated gas boiler | Saves about £20 to £120 per year while electricity is VAT-free |
| Old G-rated gas boiler | Saves about £345 per year |
| Oil boiler | Saves about £330 to £590 per year (oil at 105p to 125p a litre) |
| LPG boiler | Larger saving than oil (LPG is supplier-priced, see below) |
| Electric storage heating | Typically the largest saving (depends on your Economy 7 rates) |
We give figures for gas and oil but not for LPG or electric storage heating, and that is deliberate. Ofgem does not publish Economy 7 unit rates, and bulk domestic LPG is negotiated per supplier and per tank contract rather than published. Any single number we printed for those two would be a guess dressed as a fact. The direction is not in doubt, though: both are expensive ways to heat a home, and a heat pump beats them comfortably.
To get your own figure, take your fuel’s cost per kWh of delivered heat and compare it with the heat pump’s, which is your electricity rate divided by the SPF. For LPG, divide your price per litre by 7.1 kWh per litre and then by your boiler efficiency. For storage heating, use your Economy 7 night rate, since that is what the heaters charge on.
The gas figures are anchored to the Ofgem price cap. The oil, LPG and electric storage figures are not: those fuels are not price-capped, so they move week to week and the savings above move with them. The oil range covers heating oil at 105p to 125p per litre including 5% VAT. The BoilerJuice UK average was 104.57p before VAT (about 110p with VAT) on 8 November 2026, which puts the saving at roughly £395, down from 111.84p on 17 October. Treat these figures as indicative.
These are our own calculations, based on 12,000 kWh of annual heat demand for a three-bedroom semi at Ofgem October to December 2026 rates and a seasonal performance factor of 3.1. Your figures will differ with your home, your tariff and your installation quality. Use the heat pump running cost calculator to run your own numbers, and see our running costs guide for the full method.
A great many heat pump comparisons quote savings against an old, inefficient boiler and present that as the general case. If your boiler is a recent condensing model in good order, replacing it with a heat pump will barely cut your heating bill at current prices, and may not cut it at all once VAT returns to electricity. The case for switching then rests on carbon, on the grant, on lifespan, or on getting off oil or LPG - not on running cost.
Why Efficiency Decides It
A heat pump’s seasonal performance factor, or SPF, is how many units of heat it delivers per unit of electricity across a whole year. It is the number the entire comparison hangs on.
At Ofgem October to December 2026 rates, the break-even point against a new gas boiler is an SPF of 3.04 if the boiler matches its 92% rating, or 2.77 at the government’s 84% real-world assumption. Below that, gas is cheaper to run. Above roughly 3.5, the heat pump is clearly ahead and the gap widens the higher the SPF goes.
This is why installation quality matters more for heat pumps than for boilers. A boiler fitted badly is still roughly as efficient as one fitted well. A heat pump running at an SPF of 2.8 because it is forced to high flow temperatures by undersized radiators will cost noticeably more to run than one achieving 3.8. Our guide to heat pump radiators explains why emitter sizing drives flow temperature, and flow temperature drives SPF.
Installation Cost and the Grant
Upfront cost is where the two systems diverge most. A heat pump installation runs £7,000 to £13,500 before grants, against about £3,500 for a gas boiler including VAT, the figure the Department for Energy Security and Net Zero (DESNZ) uses. The Boiler Upgrade Scheme is what closes that gap.
GOV.UK confirms a £7,500 grant towards an air source heat pump in England and Wales, rising to £9,000 until March 2027 for off-gas-grid properties heated by oil or LPG. After the grant, a typical net cost falls to roughly £4,500 to £6,000. DESNZ puts the median installed cost of an air-to-water heat pump at about £12,500 in 2024/25 (BUS business case), which leaves about £5,000 after the standard grant, or about £1,500 more than a new boiler.
| Heat pump | Gas boiler | |
|---|---|---|
| Installed cost | £7,000 to £13,500 | About £3,500 (DESNZ estimate) |
| Government grant | £7,500, or £9,000 off gas grid until March 2027 | None |
| Typical net cost | £4,500 to £6,000 | Full price |
| VAT | 0% until 31 March 2027 | Standard rate |
| Expected lifespan | About 20 years | About 10 to 15 years |
| Annual service | £150 to £300 | Around £100 to £120 (British Gas) |
| Provides cooling | Only on specific models | No |
The lifespan difference is easy to overlook and materially changes the comparison. A heat pump lasting 20 years spans roughly one and a half to two boiler replacement cycles, so a like-for-like comparison over 20 years should count the cost of replacing the boiler once along the way. Full detail is in our air source heat pump cost guide, and every available grant is set out in our UK heat pump grants guide.
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Payback: How Long Until It Pays for Itself?
Payback depends almost entirely on what you are replacing, and on whether you were going to buy a new boiler anyway. Against a new gas boiler, a saving of about £20 to £120 a year is unlikely to repay the extra upfront cost.
- Swapping out an old gas boiler that still works: about 13 to 17 years, paying £4,500 to £6,000 after the grant to save around £345 a year
- Old gas boiler that needs replacing anyway: the heat pump costs about £1,500 more than a new boiler and saves £20 to £120 a year against it, so about 13 years at best; the stronger argument is that it should outlast a boiler by several years
- Replacing an oil boiler: about 5 to 13 years where the £9,000 off-gas-grid grant applies, depending on the oil price (about 8 to 11 years at early November 2026 prices)
- Replacing LPG: usually faster than oil, because LPG costs more per unit of heat; work it out from your own contract price using the method above
- Replacing a new A-rated gas boiler: unlikely to pay back on running costs alone
A dedicated heat pump electricity tariff makes a substantial difference, because it cuts the price of the one input the heat pump depends on. If you are close to break-even on standard rates, tariff choice can decide the outcome.
Which Should You Choose?
The decision is rarely about which technology is better in the abstract. It is about your current heating system, your fuel, and how long you plan to stay.
| Your situation | Choose | Why |
|---|---|---|
| You heat with oil or LPG, off the gas grid | Heat pump | Biggest savings plus the £9,000 grant; payback about 5 to 13 years on oil depending on the oil price, faster on LPG |
| You have electric storage heating | Heat pump | Typically the largest saving of any scenario |
| Your gas boiler is old and near failure | Heat pump | After the grant it costs about £1,500 more than a new boiler, runs slightly cheaper and should last years longer |
| Your home is well insulated with generous radiators | Heat pump | Achieves a high SPF, which is what makes it cheap to run |
| Your gas boiler is new and efficient | Keep the boiler | Running cost saving of about £20 to £120 a year; replacing it early wastes the remaining life |
| Poorly insulated home, no budget to improve it | Gas boiler for now | Low SPF means high running costs; insulate first, then reconsider |
| You are moving within a few years | Gas boiler | Payback periods run well beyond a short stay |
One pattern runs through the whole table: insulation comes first. A heat pump in a leaky house runs at a low SPF, costs more than the figures above, and disappoints. The same heat pump in the same house after insulation upgrades performs as advertised. If your budget will not stretch to both, insulation is the better first purchase, and it improves your bills whichever heating system you end up with.
Our guide to whether heat pumps are worth it takes the wider case including carbon and comfort, and heat pump sizing covers matching output to your property. If you have decided to switch, our heat pump buyer’s guide covers what to check at the survey and quote stage.
How We Researched This Guide
Energy prices are Ofgem’s published price cap for 1 October to 31 December 2026: electricity at 26.32p per kWh with no VAT, and gas at 7.97p per kWh including 5% VAT. Grant rates and the VAT position come from GOV.UK and HMRC. Running cost and payback figures are our own calculations, stated with their assumptions: 12,000 kWh annual heat demand for a three-bedroom semi and a seasonal performance factor of 3.1. The old G-rated boiler is assumed to run at 70% efficiency and the oil boiler at 90% efficiency with 10.35 kWh of energy per litre of kerosene.
Payback divides the extra upfront cost by the annual saving, using the DESNZ median installed cost of about £12,500 for an air-to-water heat pump and about £3,500 for a gas boiler, with no allowance for servicing, standing charges or future price changes.
New boiler figures are shown at both the 92% ErP minimum and the 84% in-situ efficiency the Department for Energy Security and Net Zero assumes in its boiler policy assessment.
We publish the assumptions because the answer is genuinely sensitive to them. A different SPF, tariff or heat demand moves the result, and in the closest scenario, against a new gas boiler, it can move it either way. Anyone quoting a single confident savings figure without stating a home size, an efficiency and a tariff is not giving you a usable number.
Last updated: October 2026. The Ofgem price cap changes quarterly and these comparisons move with it.
