Oil boilers vs air source heat pumps: Which is better for your home?

Choosing the right heating system is one of the biggest decisions for homeowners across the UK, especially if you currently rely on an oil boiler. Currently, over a million homes across the UK are heated with oil rather than electricity or gas.⁽¹⁾

For households that want more predictable energy costs and less hassle managing fuel supplies, technologies like heat pumps are becoming an increasingly attractive alternative.

This guide compares the two systems in terms of cost, efficiency, running costs, maintenance, carbon impact, and long‑term value so you can make a confident, informed choice.

Air source heat pump vs oil boiler: quick comparison

What is an oil boiler and how does it work?

An oil-burning boiler is a heating system that uses heating oil to warm your home and provide hot water. It works similarly to a gas boiler, but instead of using gas from the mains supply, it burns oil stored in a tank on your property.

How an oil boiler works

1. Oil is stored in a tank
   Heating oil is kept in a tank outside your home and travels to the boiler through a pipe.
2. The oil is burned in the boiler
   Inside the boiler, the oil mixes with air and is ignited by a burner in a combustion chamber.
3. The boiler heats the water
   The heat from the burning oil warms the water inside the heating system.
4. Hot water heats your home
   The heated water is pumped through your radiators to warm your rooms. It can also provide hot water for taps, showers and baths.
5. The water returns to the boiler
   As the water cools, it flows back to the boiler to be heated again. This cycle continues while your heating is on.

Oil boilers are most common in rural areas where homes are not connected to the gas network. They can be a reliable way to heat a home where other fuel options are limited.

What is an air source heat pump, and how does it work?

An air source heat pump (ASHP) is a low‑carbon heating system that can provide both heating and hot water for your home. Unlike an oil or gas boiler, it doesn’t burn fuel — instead, it uses electricity to capture heat from the outside air and move it into your home.

How an air source heat pump works

1. Extracting heat from the air
   The heat pump has an outdoor unit, usually located in a garden or another outdoor space. The unit is typically around 2m x 1m x 1m, with some clear space in front and behind to allow airflow. Even when the air feels cold outside, there is still heat energy that the system can capture.
    
2. Using a refrigerant system
   Inside the heat pump, a refrigerant absorbs the heat from the air. The refrigerant is then compressed, which raises its temperature significantly.
    
3. Transferring heat indoors
   The heated refrigerant passes through a heat exchanger inside the home. It transfers its heat to your central heating system (radiators, underfloor heating, or a hot water cylinder), warming your home and providing hot water.
    
4. Continuous cycle
   The refrigerant cools down after releasing heat, flows back to the outdoor unit, and starts the process again. This cycle continues as long as your heating is on.

This means that air source heat pumps are incredibly efficient. Air source heat pumps can produce 3–4 units of heat for every 1 unit of electricity used. This is because they move heat rather than generating it by burning fuel. In comparison, even a modern oil boiler is typically only around 85–90% efficient.

Heat pumps vs oil boilers, costs

Installation cost

The biggest cost difference between the two systems is the upfront installation price.

Heat pumps are more expensive to install because they often require extra work, such as a hot water cylinder, new pipework or larger radiators. This makes installing a heat pump seem daunting, but investing in a new heating system can pay off in the long run.

Many homes in England and Wales can get a £7,500 grant through the Boiler Upgrade Scheme, which can significantly reduce the cost. Also, some installers offer 0% finance packages, making them a more affordable option.

Annual running costs

Running costs depend on your home, insulation, energy prices and your usage. For a typical three-bedroom home, estimates look like this:

Air source heat pump costs can be around £992 per year to run, depending on electricity prices and system efficiency.

Here’s how we worked it out:

• A typical three-bedroom home needs about 11,500 kWh of energy per year for heating
• With a heat pump efficiency (Coefficient of Performance) of around 300%, the electricity required is one-third of the total heat needed
• Multiplying this by the average UK electricity price of 25.9p per kWh gives:

(11,500 kWh ÷ 300%) × 25.9 p per kWh of electricity = £992

Energy prices can vary, and your home’s energy needs may differ, so this is an illustrative example. Further savings for heat pump users are possible by choosing a heat pump tariff that offers lower rates for heating and hot water on a daily basis.

Oil boilers are less predictable. The average annual running cost is around £1,100, but prices can rise sharply during periods of high oil costs since heating oil is not covered by the energy price cap. Some homes may pay £1,200–£2,000+ per year, especially in winter or when oil prices spike.

What’s more efficient? Air Source Heat Pump or oil boiler?

When it comes to efficiency, air source heat pumps are usually far more efficient than an oil boiler. Here’s why:

Efficiency of an oil boiler

• Modern oil boilers are typically 85–90% efficient, meaning that about 10–15% of the energy in the fuel is lost as heat during combustion
• Even high-efficiency oil boilers cannot exceed 95% efficiency because of the way burning fuel works
• Efficiency can also drop if the boiler is older, poorly maintained, or if the home is not well-insulated

Efficiency of an air source heat pump

• Air source heat pumps do not burn fuel. Instead, they move heat from the outside air into your home
• This means they can produce 3–4 units of heat for every 1 unit of electricity used. In other words, their efficiency is 300–400%, compared with 85–90% for an oil boiler
• Even in colder temperatures, modern ASHPs continue to extract heat efficiently, although output may be slightly lower in extreme cold

What this means in practice

• A heat pump can heat your home and provide hot water using far less energy than an oil boiler
• Lower energy use not only saves money (depending on electricity vs oil prices) but also reduces your carbon footprint
• Efficiency gains are greatest in well-insulated homes with good heating controls

Do oil boilers require more maintenance and servicing than heat pumps?

Yes, oil boilers generally require more maintenance and servicing than air source heat pumps. Here’s why:

Oil boiler maintenance

• Oil boilers burn fuel, which produces combustion by-products such as soot and carbon deposits. These build up over time and can reduce efficiency
• Most oil boilers require an annual service by a qualified engineer to check the burner, flue, fuel supply, and overall efficiency
• Tanks and fuel lines also need periodic inspection to prevent leaks or contamination
• If neglected, an oil boiler can become unsafe, less efficient, or fail completely

Air source heat pump maintenance

• Heat pumps do not burn fuel, so they do not produce combustion by-products
• They still require maintenance to check refrigerant levels, clean filters, and ensure the outdoor unit is clear of debris
• Most heat pump manufacturers recommend a service every 1–2 years, which is typically less involved and less costly than an oil boiler service
• There’s no fuel tank to monitor or refill, which also reduces ongoing maintenance hassle

Typical lifespan comparison:

Which is better for the environment, heat pump or oil boiler?

If you are comparing heating systems for an off-grid home, one of the biggest differences between a heat pump and an oil boiler is their environmental impact. In most cases, a heat pump is significantly better for the environment.

Carbon emissions

Oil boilers burn heating oil to produce heat. This process releases carbon dioxide directly into the atmosphere every time the boiler runs.

Heating oil is a fossil fuel, so using it for home heating contributes to greenhouse gas emissions and climate change. A typical oil-heated home can produce several tonnes of carbon dioxide each year just from heating and hot water.

Heat pumps work very differently. Instead of burning fuel, they move heat from outside air or the ground into your home using electricity. Because there is no combustion, a heat pump produces no direct emissions at the point of use.

Even though heat pumps use electricity, the overall carbon footprint is still much lower because the UK electricity grid is increasingly powered by renewable energy sources such as wind and solar. This means that heat pumps will become even greener in the future, whereas oil boilers always rely on fossil fuels.

In summary

Heat pumps

• Higher installation costs, however, are offset by grants and finance packages that help homeowners with these costs
• Often has cheaper running costs than oil and heat pump tariffs, which help with lower daily rates
• Lower carbon emissions
• Longer lifespan

Oil boilers

• Cheaper to install
• Running costs depend heavily on oil prices, which are volatile
• Require an oil tank and fuel deliveries
• Higher carbon emissions

Can you replace an oil boiler with a heat pump?

Yes, in many homes you can replace an oil boiler with a heat pump. In fact, thousands of off-grid properties across the UK are already making the switch.

A heat pump works best in a well-insulated home, so the first step is usually to check things like loft insulation, wall insulation and double glazing. Some homes may also need larger radiators or a hot water cylinder because heat pumps run at lower temperatures than oil boilers.

The good news is that if your home already has a wet central heating system with radiators or underfloor heating, a heat pump can often connect to that system. A qualified installer will assess your home and recommend any upgrades needed to make sure the system works efficiently.

While the upfront installation cost is higher than replacing an oil boiler like-for-like, many homeowners find the long-term benefits appealing. These include lower carbon emissions, more stable energy costs and no need to manage fuel deliveries.

Is there an oil boiler ban in the UK?

There is currently no ban on existing oil boilers in the UK. If your home already has an oil boiler, you can continue using it.

However, the government has set targets to reduce the use of fossil fuels in home heating as part of the UK’s net zero plans.

In England, new-build homes are expected to stop installing fossil-fuel heating systems, such as oil and gas boilers, from 2025 under the Future Homes Standard. This means new properties will need to use low-carbon heating systems like heat pumps.

There have also been proposals in the past to phase out the installation of new oil boilers in some off-grid homes in the future, although timelines may change as policy evolves.

For many homeowners, this is one of the reasons they are starting to explore heat pumps now rather than waiting until an oil boiler reaches the end of its life.

Which is better for your home?

The right heating system depends on your home, your budget and your long-term goals. That said, heat pumps are becoming an increasingly attractive option for homes that currently rely on oil heating.

Oil boilers often have lower installation costs, but they come with ongoing challenges such as volatile oil prices, large upfront fuel purchases and the need to arrange deliveries.

Heat pumps can provide a more predictable way to heat your home. You do not need to order fuel, worry about running out of oil or track delivery schedules. Instead, your heating becomes part of your electricity use.

They are also much more energy-efficient and produce far fewer carbon emissions, making them a strong option for households looking to future-proof their homes.

What support can the government provide to upgrade an oil boiler?

The UK government currently offers financial support to help homeowners switch to low-carbon heating.

The main scheme available in England and Wales is the Boiler Upgrade Scheme. This provides a grant of up to £7,500 to help cover the cost of installing an air source or ground source heat pump.

The grant is usually applied directly by your installer, which means the discount is taken off the installation cost rather than being paid to you afterwards.

There may also be additional support available through local schemes or energy efficiency programmes, depending on where you live.

Because heat pumps have a higher upfront cost, these grants can make a significant difference, bringing the overall price much closer to that of replacing an oil boiler.

Summary

Oil boilers have been a reliable heating option for off grid homes for many years, but they come with challenges that many homeowners know all too well. Volatile oil prices, the hassle of arranging deliveries and the risk of running out of fuel can all add stress and unpredictability to your heating costs.

Heat pumps offer a different approach. They do not rely on delivered fuel; they are far more energy efficient, and they produce much lower carbon emissions. With government grants and air source heat pump finance available, switching from oil to a heat pump is becoming more achievable for many households. 

If you are thinking about upgrading your heating system, it is worth exploring your options in more detail. You can learn more about how heat pumps work, compare running costs and see whether your home could be suitable by browsing the other guides and resources across our site.

Taking the time to understand your options today could help you move towards a heating system that is cleaner, more predictable and better suited to the future.