A heat pump can cut your heating bills, but how much you save depends on what you're replacing. Swap an old electric, oil or LPG system and the drop is large. Swap a fairly new gas boiler and the saving is more modest, until you add the £7,500 government grant that takes most of the cost off the installation.
This guide covers the honest numbers for UK homes in 2026: what a heat pump costs, what you can claim, what it saves, and how to avoid the mistakes that leave people disappointed.
How much does a heat pump actually save?
It depends on the system you're swapping out. That's the part most guides skip.
If you're replacing old electric storage heaters, oil, or LPG, an air source heat pump usually cuts your heating costs noticeably, because those fuels are expensive per unit of heat. If you're coming off a modern, efficient gas boiler, the running-cost saving is smaller and depends heavily on the gap between gas and electricity prices on your tariff.
The reason a heat pump can compete with cheap gas at all is efficiency. A good air source unit delivers around 3 to 4 units of heat for every unit of electricity it draws. A gas boiler gives back less than one. So even though electricity costs more per kWh than gas, the heat pump needs far fewer kWh to warm the same home.
Your actual saving comes down to your home's insulation, the system you're replacing, how the heat pump is set up, and energy prices at the time of installation. A heat pump in a draughty, uninsulated house will struggle. The same unit in a well-insulated home, run steadily at a lower flow temperature, does its best work.
What does it cost to install?
A typical air source heat pump runs from around £8,000 to £14,000 before any grant, depending on the size of your home and how much radiator or pipework upgrading is needed. Ground source systems cost more because of the groundworks.
Then the grant comes off. The Boiler Upgrade Scheme pays £7,500 towards an air source or ground source heat pump, which often brings the net cost down to somewhere between £1,500 and £7,000. The exact figure depends on your property, so treat these as guide ranges rather than a quote.
The Boiler Upgrade Scheme: £7,500 off
The Boiler Upgrade Scheme (BUS) is the main grant for heat pumps in England and Wales. It pays:
- Air source heat pumps: £7,500
- Ground source heat pumps: £7,500
- Biomass boilers: £5,000
- Urban Big Data Centre, University of Glasgow — the research behind the ~6–7% solar property-price premium (the study found a 6.1%–7.1% premium): How do solar panels affect property prices in the UK?. Underlying peer-reviewed study: Asproudis, Gedikli, Talavera & Yilmaz, "Returns to solar panels in the housing market: A meta learner approach", Energy Economics — full paper.
- GOV.UK — Boiler Upgrade Scheme (£7,500 air/ground source, £5,000 biomass; England & Wales): eligibility and grant amounts.
- HMRC — 0% VAT on energy-saving materials (VAT Notice 708/6; zero rate applies to 31 March 2027): official guidance.
- Ofgem — Energy Company Obligation (ECO4) (runs to 31 December 2026): official scheme page.
- GOV.UK — Warm Homes: Local Grant: scheme guidance.
- Microgeneration Certification Scheme (MCS): mcscertified.com.
You don't apply yourself. Your installer has to be MCS certified, and they claim the grant on your behalf and take it straight off your bill. You need to own the property and be replacing a fossil fuel system like a gas, oil or LPG boiler.
Scotland runs its own support through Home Energy Scotland, which offers grants and interest-free loans for heat pumps rather than the BUS.
What else can you claim?
Heat pumps carry 0% VAT until 31 March 2027, so there's no VAT to add on a qualifying installation. After that the rate is due to return to 5%.
Lower-income and fuel-poor households may get a heat pump fully or partly funded through the Energy Company Obligation (ECO4), which runs to 31 December 2026, or through the Warm Homes: Local Grant delivered by local councils in England. Eligibility usually depends on your income, the benefits you receive, and your home's EPC rating. It's worth a five-minute check before you assume you'll pay full price.
How efficient is a heat pump in the cold?
Modern air source heat pumps keep working in a British winter. They're designed to run in temperatures down to around -15°C to -20°C. Output dips when it's bitterly cold, which is exactly when you need the most heat, so correct sizing matters. A well-specified system handles the coldest weeks of the year without a back-up bar heater.
The efficiency figure to look for is the SCOP (seasonal coefficient of performance). A SCOP of 3.5 means the unit produces 3.5 kWh of heat for every kWh of electricity across a typical year. The higher the number, the lower your running costs.
Does a heat pump add value to your home?
Energy efficiency matters to buyers, and a system that lifts your EPC rating can make a home easier to sell. The clearest UK evidence on price is for solar: research by the Urban Big Data Centre at the University of Glasgow found homes with solar panels command a premium of around 6-7%, though any uplift varies by property, location and market conditions. A heat pump that improves your home's efficiency can support its appeal too, though the effect is harder to put a single number on.
Getting it right
The difference between a heat pump that saves money and one that disappoints almost always comes down to design.
A proper heat-loss survey, room by room, sizes the unit to your home rather than to a rule of thumb. Some radiators may need upsizing so the system can run at a lower, more efficient flow temperature. And the installer should be MCS certified, both for the grant and for the quality standard it sets.
Done well, an air source heat pump gives you steady, low-carbon heat and lower bills than the system it replaced. Done badly, it runs hot and short and costs more than it should.
If you're weighing one up, get in touch for a free survey. We'll give you honest figures for your home, handle the Boiler Upgrade Scheme paperwork, and tell you straight if a heat pump isn't the right move for you yet.
Thinking about a heat pump? Contact us for a free home survey and a clear, no-pressure quote.