Is a Heat Pump Worth It in the UK in 2026? Running Costs, the £7,500 Grant, and Who It Doesn't Pay For

A heat pump is the most heavily subsidised home-energy upgrade in the UK right now, and for a lot of homes it's a genuinely good decision. But "heavily subsidised" and "right for your house" are two different questions — and the honest answer to the second is: it depends. This guide walks through the grant, the running costs, and — because we sell and install nothing — the homes where a heat pump probably won't pay.

The £7,500 grant: what the Boiler Upgrade Scheme actually gives you

In England and Wales, the Boiler Upgrade Scheme (BUS) is administered through Ofgem and GOV.UK, and it's the single biggest home-energy incentive in the country. The grant amounts in our current knowledge pack are:

System	BUS grant
Air-source heat pump	£7,500
Ground-source heat pump	£7,500
Oil or LPG home (replacing)	£9,000
Air-to-air heat pump	£2,500

Crucially, the grant is applied by the installer as an upfront discount — you don't pay the full amount and claim it back. You need an MCS-certified installer and product to qualify. After the grant, our pack puts a typical installed cost in the region of £3,000–£7,000, depending on your home, radiators and cylinder work.

Running costs: why the tariff matters more than the heat pump

Here's the part most people get wrong. A heat pump runs on electricity, and grid electricity is expensive — our pack lists a typical unit rate of around 24.67p/kWh under the Ofgem price cap (which resets every quarter, with standing charges on top). Compared cheaply against gas, a heat pump on a standard tariff can look underwhelming.

The running-cost case is built on two things working together:

• Efficiency. A well-designed heat pump delivers several units of heat per unit of electricity — so you buy far fewer kWh than the raw price suggests.
• A heat-pump smart tariff. Tariffs like Cosy Octopus are tuned specifically for heat-pump running costs, with cheap windows you can heat into. You'll need a smart meter to access them.

We're deliberately not quoting a headline p/kWh for these smart tariffs — they change with 30 days' notice and vary by supplier, so any number we printed would be out of date fast. The point stands: the same heat pump can be cheap or expensive to run depending entirely on the tariff you pair it with. Before anyone quotes you a saving, they should be reading your actual bill — your unit rate, standing charge and whether you're on a fixed, Economy 7 or time-of-use plan.

The homes where a heat pump pays

A heat pump tends to make strong financial and comfort sense when several of these are true:

• You're currently on oil or LPG — the £9,000 grant is larger, and you're displacing expensive fuel.
• Your home is reasonably well insulated (decent loft and wall insulation, sensible glazing), so heat demand is moderate.
• You have — or can fit — appropriately sized radiators or underfloor heating, letting the pump run at low, efficient flow temperatures.
• Your gas boiler is at the end of its life anyway, so you're comparing the grant-reduced heat pump against the full cost of a new boiler, not against a boiler you already own.
• You're happy to move onto a heat-pump smart tariff and shift some flexible load into cheap windows.

Here's the catch: the homes where it might NOT pay

We'd be a poor independent adviser if we didn't say this plainly. A heat pump can be a weak decision when:

• Your home is poorly insulated. A heat pump into a draughty, uninsulated house runs harder, hotter and more expensively. Insulation first is often the better spend — and the Warm Homes Plan may fund insulation for eligible low-income households (income and tenure rules apply; never assume you qualify).
• You have a perfectly good, recent gas boiler. Ripping out a five-year-old boiler to fit a heat pump rarely stacks up financially, even with £7,500 off.
• Your radiators are small and there's no realistic upgrade path. Forcing high flow temperatures wrecks efficiency and the running-cost case with it.
• You won't or can't move to a smart tariff. On a standard tariff at around 24.67p/kWh, the running-cost advantage narrows considerably.

None of this means "don't get a heat pump." It means the honest answer is specific to your house, your bill and your boiler — not to a brochure.

How to decide well

Get an MCS-certified installer's proper heat-loss survey (not a guess), confirm the current BUS or Home Energy Scotland terms for your address, and check the current heat-pump smart tariff figures rather than any number quoted to you months ago. Then compare the grant-reduced install and realistic annual running cost against what you'd actually pay to keep your existing system. If the numbers only work when you squint, they don't work.

We don't sell heat pumps, we don't install them, and we take nothing from any installer or supplier — not even a referral fee, which is more than the "free" comparison sites can say. Our only job is to tell you, in writing, whether a heat pump pays for your home. Sometimes the most valuable thing we can say is: not yet, or not this one.

Figures in this guide are current at the date of publication and indicative only — SEG/export rates change with 30 days' notice, the Ofgem price cap resets quarterly, and grant terms change. Confirm the current numbers for your situation before you commit. This is general information, not personal financial advice.