WIREDGOV

Find out how the VAT cut on household electricity bills will work for you.

In July 2026, the Prime Minister cut taxes on electricity bills.

From 1 October 2026, VAT will be removed from household electricity bills, saving households an average of £45 per year.

This has limited the rise in Ofgem’s energy price cap. It follows the £150 of costs we removed from bills earlier this year.

Around 6 million households are also eligible for our Warm Home Discount this winter, which provides a further £150 off electricity bills.

Find out if you qualify for the Warm Home Discount.

What does this mean for me?

You do not need to do anything to claim the savings.

Suppliers add up the amount of electricity used in a given period, along with your daily electricity standing charge, and apply 5% VAT to that part of your bill.

From 1 October 2026, this requirement will be removed, meaning we expect all suppliers not to charge VAT on your electricity bill.

That includes fixed energy tariffs where you have already locked in your rate.

The exact amount you save will depend on the price of electricity your supplier sets, and how much you use.

What if I use a pre-payment meter?

When you top up your pre-payment meter, VAT is automatically charged on the money you load onto your key or card.

From 1 October 2026, VAT will no longer be applied.

What if I’m on a non-domestic tariff?

Small businesses, charities and residential care homes that already qualify for the reduced 5% VAT rate on electricity, including through the existing VAT certificate and declaration process, will also benefit from the 0% rate this winter.

How long will this last for?

The VAT cut has been funded for the 2026 to 2027 financial year, through the cancellation of the digital ID programme.

We will keep looking at what more we can do to protect families from unaffordable bills.