VAT Cut From Household Electricity Bills in October
2026-07-21 06:16:59
The UK government will cut VAT on household electricity bills from 5% to 0% from 1 October, saving a typical household about £45 a year, according to BBC. The measure is part of new prime minister Andy Burnham’s plan to ease the cost of living, and ministers said it will be funded by savings from cancelling the digital ID programme, which was due to cost £1.8bn over the next three years. The government estimated the VAT cut will cost £850m this financial year. New chancellor John Healey said the move would "provide some reassurance this winter". Suppliers have been told to pass the reduction on to all household customers, including those on fixed tariffs, and equivalent funding will be provided to Northern Ireland, which is regulated differently. Small businesses eligible for domestic energy VAT relief and not registered for VAT, plus charities and residential care homes eligible for the reduced rate, will also benefit.
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