Heat Pump vs Oil Boiler Cost Calculator

How this calculator works

This calculator works in ranges rather than single figures, because real quotes, yields and tariffs genuinely vary that much. It starts from typical UK price, output and savings ranges drawn from published 2026 industry guides and official scheme documentation, then scales them by the quantities you enter and adjusts them for each choice you make below. The result is a low-to-high band that a realistic outcome is likely to fall within, not a promise of the figure you will achieve.

A replacement oil boiler costs to installed, with a new tank adding to where needed, against to for an air source heat pump before the Boiler Upgrade Scheme grant that oil-heated homes, as fossil fuel replacements, squarely qualify for. Running costs are genuinely close at 2026 prices: heating oil around 60 to 75 pence per litre delivers heat at roughly 6 to 8 pence per kWh through a modern boiler, almost exactly the heat pump’s 6 to 9 pence on a standard electricity tariff.

Home size

Home size scales the installation estimates: larger homes need higher output units, more emitters and more labour, while flats and small houses sit below the typical three bedroom baseline that published guide prices describe. It does not scale the running cost estimates here, which follow the annual heat demand figure you enter instead.

Annual heat demand (kWh)

This is the heat your home needs over a year for space heating and hot water, not the fuel you buy. A typical UK three bedroom house needs roughly 10,000 to 14,000 kWh of heat a year; if you currently heat with gas, your annual gas kWh from your bill multiplied by about 0.85 (boiler efficiency) is a reasonable estimate of heat demand. Well insulated homes sit far lower and large or draughty ones far higher, and every running cost figure on this page scales directly with this number.

Where you live

Installation labour is not priced uniformly across the UK, with published guides putting London and South East quotes roughly 15 to 25 percent above the national average. Hardware prices are broadly national, so the difference sits mostly in labour, access and overheads.

Heat pump electricity tariff

The heat pump’s running cost depends heavily on its tariff: standard rates sit around 24.7 to 26.1 pence per kWh under the 2026 caps, while dedicated heat pump and time-of-use tariffs cut the effective rate by a quarter or more through cheap windows and smart scheduling. The comparison system’s fuel is priced at standard rates throughout, so the tariff choice here shows how much of the gap smart tariffs can close or open.

What else affects the figures

Oil’s running cost problem is volatility rather than level: prices have swung between roughly 40 and 120 pence per litre within recent years, and every winter’s bill is a fresh negotiation with the market, while heat pump costs track the far steadier electricity cap and drop further on time-of-use tariffs. Oil also carries costs the per-litre price hides: boiler servicing, tank inspection, insurance implications and eventual tank replacement, plus the practical business of ordering deliveries and watching the gauge. Off-grid homes are precisely where heat pumps have grown fastest, and where solar pairs especially well given the roof space rural properties typically offer. The pragmatic 2026 answer for most oil homes: run the current boiler while it is sound, but when replacement looms, the grant makes the heat pump the stronger buy.

Certification, planning and grid connection

Most air source heat pump installations fall under permitted development in England, provided the unit meets size and siting rules and the MCS 020 noise assessment, which requires no more than 42 decibels at the nearest neighbouring window, a point worth early attention in terraced housing; listed buildings and conservation areas need planning advice. Use an MCS-certified installer: certification is a condition of the Boiler Upgrade Scheme grant, and the installer applies for the grant and deducts it from your invoice. Residential heat pump installations carry 0 percent VAT until March 2027, and your installer handles building regulations notification and any electrical supply checks as part of the job.