For a reasonably well-insulated off-grid home, an air source heat pump is usually cheaper to run than an oil boiler at 2026 prices, and the £9,000 Boiler Upgrade Scheme grant for oil-heated homes closes most of the gap in upfront cost. An oil boiler is still cheaper to buy, quicker to fit and better suited to older, draughty homes that would need a lot of work before a heat pump could keep them warm.
Neither choice is wrong. The right one depends on your house, your budget and how much disruption you are willing to take on. These are the questions to work through.
How do a heat pump and an oil boiler compare at a glance?
| Oil boiler | Air source heat pump | |
|---|---|---|
| Typical installed cost | From £2,895 with us, around £3,300 to £4,000 UK average | Around £13,000 median before grant |
| Grant (England and Wales) | None | £9,000 for oil or LPG homes with no mains gas, until 31 March 2027 |
| Cost after grant | As above | Roughly £4,000, plus any radiator upgrades |
| Running cost per kWh of heat* | About 12.6p | About 8.8p |
| Fuel storage | Oil tank and deliveries | None |
| Flow temperature | High, works with existing radiators | Lower, may need larger radiators |
| Installation time | Usually one day | Typically several days |
| Yearly servicing | Yes, by an OFTEC engineer | Yes, by a heat pump engineer |
| Carbon emissions | High, lower with HVO | Much lower, falling as the grid gets greener |
*Our approximate calculation at October 2026 prices: kerosene around 117p per litre, a 90% efficient boiler, the Ofgem electricity price cap and a heat pump efficiency (SCOP) of 3. Standing charges excluded.
Which is cheaper to run, a heat pump or an oil boiler?
At current prices, the heat pump, by around 30%. A typical older three-bed house using about 16,000 kWh of heat a year would spend roughly £2,000 on kerosene, compared with around £1,400 of electricity for a heat pump. You don’t pay an extra standing charge for a heat pump because you already have an electricity supply.
That gap moves with fuel prices, and oil has been especially changeable. Kerosene roughly doubled in price over the year to October 2026, while electricity sits under the Ofgem price cap. A year earlier, oil was the cheaper of the two. Heat pump running costs also depend heavily on how well the system is designed: a poorly sized heat pump running at high temperatures can be more expensive than it should be.
How much does each cost to install?
An oil boiler replacement is the cheaper upfront option. A like-for-like swap with us starts from £2,895 at a fixed price, and the UK average for a fitted oil boiler is roughly £3,300 to £4,000 depending on type. Replacing the tank adds roughly £2,200 to £2,800 for a bunded tank.
An air source heat pump has a median installed price of around £13,000 under the Boiler Upgrade Scheme. With the £9,000 grant for oil and LPG homes, you would typically pay about £4,000, plus the cost of any larger radiators, pipework or insulation the survey recommends. The installer must be MCS certified, and the grant is taken off your invoice.
Who qualifies for the £9,000 heat pump grant?
- You own the home (including landlords and second homes) in England or Wales.
- It is currently heated by oil or LPG and has no mains gas connection.
- You are replacing a fossil fuel system, not adding a hybrid.
- The installer is MCS certified and applies on your behalf.
- The application is made by 31 March 2027, after which the standard £7,500 applies.
Social housing and most new builds are excluded, and the scheme doesn’t cover Scotland or Northern Ireland.
Is my home suitable for a heat pump?
Probably, if most of these are true:
- The loft is insulated and the walls are cavity-filled or reasonably well insulated.
- Windows are double glazed.
- There is outside space for the unit, ideally on a wall that isn’t right under a bedroom window.
- There is room for a hot water cylinder, or one already.
- Radiators are a reasonable size, or you are happy to upgrade a few.
Solid stone walls, single glazing, small radiators and nowhere to put a cylinder all make a heat pump harder, though not impossible. Many Dales farmhouses and Pennine cottages fall into this group, and for them a modern condensing oil boiler is often the better fit for now. A heat pump survey will tell you for certain.
What if my home isn’t ready for a heat pump yet?
Replace the oil boiler with a modern condensing model and improve the house over time. A new boiler can burn noticeably less oil than an old non-condensing one, most current models can be converted to run on HVO later, and insulation work you do now makes a future heat pump easier and cheaper to run. Our best oil boilers guide compares the leading models.
Are there other options besides these two?
Yes. LPG boilers, ground source heat pumps, biomass boilers, electric boilers and HVO fuel are all worth a look, and some suit particular homes better. We compare them all in our oil boiler alternatives guide. If you do have mains gas nearby, our heat pump vs gas boiler comparison is the more relevant read.
Will oil boilers be banned?
Not in existing homes, as things stand. A proposed phase-out of new oil boilers in off-gas homes was consulted on in 2021 but never became law, and there is no ban on replacing an oil boiler in England, Wales or Scotland as of late 2026. New homes are a different story, with low carbon heating required in new builds in Scotland already and in England from March 2027.
Where is this decision most common?
Wherever oil heating is the norm. That includes Northern Ireland, rural Wales, Shropshire, East Anglia, the South West, Cumbria and Northumberland, and the rural parts of Scotland. In Yorkshire it is a live question for many households in the Dales, the North York Moors and villages around Skipton, Harrogate, Holmfirth and Selby. Ofgem’s figures show around one in six Boiler Upgrade Scheme grants paid so far have replaced an oil boiler.
My oil boiler has just broken down. Should I decide now?
Try not to rush it. If the boiler can be repaired cheaply, a repair buys you time to get a heat pump survey and compare quotes properly. Our guide to an oil boiler not firing up covers the common faults. If it can’t be repaired and you need heat quickly, a like-for-like oil boiler can usually be fitted within days, while a heat pump takes longer to survey, design and install.
Heat pump vs oil boiler: quick answers
Does a heat pump work in a Yorkshire winter?
Yes. Air source heat pumps keep working well below freezing, though efficiency drops in very cold weather. Correct sizing for your home is what matters most.
Can I keep my oil boiler as a backup?
You can, but the Boiler Upgrade Scheme doesn’t fund hybrid systems, so keeping the boiler connected alongside a new heat pump would usually mean losing the grant.
Will I need new radiators for a heat pump?
Some homes do, usually in a few rooms. Heat pumps run at lower temperatures, so radiators often need to be a bit larger to give out the same heat.
Is a heat pump noisy?
Modern units are fairly quiet, similar to a fridge or a gentle fan, and must meet permitted development noise limits. Siting it away from bedroom windows helps.
With years of experience in boilers and home improvements in general, Myles Robinson is a passionate advocate for making home heating simpler, safer, and more affordable for households across the UK. With years of experience in the heating industry, Myles combines hands-on knowledge with a focus on customer-first service, helping homeowners choose the right boiler, understand their systems, and keep their heating running efficiently all year round. His articles break down complex topics into clear, practical advice you can trust.