What does it really cost to replace an oil boiler with a heat pump?

Do I qualify for the bigger off-gas-grid grant?

Since 21 July 2026 the Boiler Upgrade Scheme has paid a higher rate to homes that are replacing oil or LPG heating and have no mains gas connection. Ofgem’s installer guidance sets out the conditions: the system being replaced runs on oil or LPG; the property has no gas connection and no gas meter point record; it is not on a heat network; it is not a new build still under construction; and the new system is an air-to-water or ground source heat pump — an air-to-air unit gets its own, lower rate. The rate itself is set by the government’s notice of approved grant categories. The scheme covers England and Wales only; Scotland runs its own.

Is the off-gas-grid grant a separate grant or a top-up?

A top-up. GOV.UK says you can get an additional £1,500 towards an air source or ground source heat pump if your home is heated by oil or LPG and has no mains gas connection. That comes on top of the standard £7,500, so an eligible home gets £9,000 in total, until March 2027. After the window closes, oil and LPG homes go back to the standard £7,500. There is one deadline and it is stated once, in the last section of this guide. Uptake was immediate: DESNZ’s Boiler Upgrade Scheme statistics for July 2026, published on 27 August 2026, record 3,037 applications for the higher rate in its first eleven days, 21 to 31 July — 37% of that month’s 8,150 applications. The August 2026 release, published on 24 September 2026, counts 5,351 applications for the higher rate by the end of August — 34% of the 15,636 received across July and August.

What would a new oil boiler cost instead?

Around £4,000 is the figure this site works with, and we should be straight about it: there is no official average price for a replacement oil boiler, so it is our working figure, not a sourced one. The only government comparator we have read is for gas — DESNZ’s Summary Business Case for the scheme (p. 7, footnote 8) puts an average gas boiler replacement at about £3,500 including VAT. An oil boiler is a different product and usually dearer. The comparison that matters is not “heat pump versus nothing” but “heat pump minus the grant versus a new boiler” — and it is never “free”.

What do people actually pay after the grant?

DESNZ’s August 2026 statistics (published 24 September 2026, Table Q1.1A) put the median cost of an air-to-water heat pump installed under the scheme in April to June 2026, still the latest quarter in the release, at £12,908, and that figure should already include the value of the grant. Note 4 of the same release is the caveat: installers “should” report the cost including the grant, but it “may be subject to interpretation by different installers”. So the median oil or LPG home paid roughly the median minus the £9,000 grant — an approximation, because of that note, and a median rather than your quote. What moves you within the range is the size of the system your home needs, whether the radiators change, and whether a hot-water cylinder has to be added.

How do they know I’m off the gas grid?

Two checks. Ofgem’s installer guidance looks for a gas meter point record at the address — a home with one is on the grid, whatever it currently heats with. Where an application does not say, DESNZ’s statistics use Xoserve’s list of off-gas postcodes instead (August 2026 release, notes to Table 1.6). The segment is not small: of the 93,364 grants paid by the end of August 2026, 35,776 — 38% — went to homes off the gas grid, and among all redemptions 16,129 were replacing oil and 2,761 were replacing LPG (Tables 1.3 and 1.6).

What will electricity cost this winter?

Ofgem’s price cap for 1 October to 31 December 2026, published on 26 August 2026, sets these rates for a typical household paying by Direct Debit:

For the same window the government has removed VAT from electricity bills, from 1 October 2026 to 31 March 2027; gas stays at 5%. Ofgem announces the cap for January to March 2027 by 25 November 2026, and this guide is updated when it does.

How do I compare oil and a heat pump per unit of heat?

The arithmetic is the same for any fuel: cost per kWh of heat = fuel price per kWh ÷ efficiency. A modern oil boiler is typically reported at around 90% efficient, so divide your oil price per kWh by 0.9. A heat pump’s efficiency is its seasonal coefficient of performance, and the scheme’s minimum, set in Ofgem’s installer guidance, is a SCOP of 2.8 — every unit of electricity in delivers at least 2.8 units of heat. At Ofgem’s October 2026 rate that is 26.32p ÷ 2.8, about 9.4p per kWh of heat at the scheme minimum; a well-designed system will do better, and the installer’s design will state its own figure. Your side of the comparison needs your oil price, and that is the one input this page cannot supply.

What is heating oil costing right now?

We do not quote a heating-oil price here, because it moves weekly and by region and a stale one would mislead you. The number that matters is on your last delivery receipt: what you paid, and for how many litres. That is the input for your side of the comparison above, and an installer’s heat-loss survey turns it into a cost per unit of heat against the heat pump’s — ask to see the working. Keep that receipt: if your home has no valid EPC it is also the alternative evidence the installer can use, alongside photos of the old system (Ofgem installer guidance, section 5.12). You no longer need an EPC to get the grant — the rule about loft and cavity-wall insulation recommendations went on 8 May 2024, and the requirement for a valid EPC itself went on 28 April 2026 (SI 2026/390, regulation 5).

Does a heat pump tariff change the answer?

Whether a heat pump beats your oil boiler depends heavily on your tariff. On a standard tariff the difference is small; on a heat pump tariff it’s much bigger. We’ll show you both, and the source. The standard rate is Ofgem’s capped unit rate above; heat pump tariffs are offered by several suppliers at lower off-peak or heat-pump-specific unit rates, and they vary. We do not rank suppliers or quote a saving, because the saving depends on your house, your usage and the tariff you choose — and any figure we gave you without those would be a guess presented as a fact.

Did people’s bills go down?

For most of them, yes — as reported by the people themselves. DESNZ’s evaluation of the scheme, summarised in its Summary Business Case (p. 7, footnotes 10 to 13), found that most property owners reported a decrease in their energy bills after installation; 87% said they were satisfied with the scheme; and between 90% and 95% were satisfied with the heat pump itself after one heating season. That is a survey finding about people who went ahead, dated to that evaluation. It is not a promise about your bills.

When does the higher rate end?

The higher rate runs until 31 March 2027. What the date attaches to — the application, the voucher, or the installation — is not settled in the primary sources we have read, and neither GOV.UK nor Ofgem states it plainly. The safe reading is to have the installer’s application in well before the date, not on it.

Who applies — me or the installer?

The installer. Under the scheme an MCS-certified installer applies to Ofgem on your behalf, as GOV.UK’s how-to-apply page sets out; you never fill in an application yourself. Ofgem will email you to confirm that the installer is acting for you and that you consent — that is your part. The grant is taken off the quote and off the invoice, and Ofgem pays the installer directly.