Electricity VAT Falls to 0% in Great Britain From 1 October 2026
If you have ever opened an electricity bill and wondered exactly what you are paying for, the VAT line is about to change. From 1 October 2026, VAT on electricity will fall from 5% to 0% for qualifying domestic supplies in England, Scotland and Wales. The change should happen automatically, so there is nothing you need to apply for.
There is an important catch, though. This does not mean your whole energy bill will simply fall by 5%. The VAT change affects electricity, while gas remains subject to 5% VAT. At the same time, Ofgem’s energy price cap is increasing from October, so what happens to your total bill will depend on how much electricity and gas you use and the tariff you are on.
The short version
- What is changing: VAT on qualifying domestic electricity in Great Britain is temporarily falling from 5% to 0%.
- Starts: 1 October 2026
- Ends: 31 March 2027
- Where: England, Scotland and Wales
- Who: Households with qualifying domestic electricity supplies
- What you need to do: Nothing. Suppliers should apply the change automatically.
- Potential saving: The government estimates an average saving of £45 over a year, although the actual amount you save depends on your electricity use and the price you pay.
VAT on electricity: what is actually changing?
Right now, most qualifying domestic electricity is charged at 5% VAT. From 1 October 2026, that charge disappears for qualifying supplies in Great Britain.
In practical terms, the VAT that would normally be added to your qualifying electricity charges disappears for the six-month period. That includes VAT applied to the electricity you use and the daily electricity standing charge.
The change is temporary. It runs from 1 October 2026 until 31 March 2027.
HMRC has confirmed that the change applies to England, Scotland and Wales. Other types of domestic fuel, including qualifying domestic gas, remain at 5% VAT.
When will I see the change on my bill?
The new treatment starts with electricity supplied from 1 October. Your supplier should apply the change automatically, so you do not need to contact them to claim the reduction.
If your bill covers a period before and after 1 October, the calculation can be more complicated. Electricity used before the change starts is not suddenly retrospectively charged at 0% VAT. Your supplier will need to apply the appropriate treatment to the relevant period.
If you normally provide meter readings, taking one around the changeover date may give you a useful record of how much electricity you had used before the new rate started. Smart meters may provide the supplier with the information automatically.
How much could you save?
The government says households will save an average of £45 a year from the electricity VAT cut. Remember that this is an annualised figure. The actual temporary saving over the six-month period will depend on your circumstances and electricity use.
It is also worth clearing up a common misunderstanding: going from 5% VAT to 0% does not mean your electricity bill becomes 5% cheaper overall. The 5% VAT is added to the underlying electricity charges, so removing it reduces the final amount by less than 5% of the total bill.
Your own saving will depend on how much electricity you use and the price your supplier charges. Someone who uses a lot of electricity will generally have more VAT to remove than someone who uses very little.
Electricity VAT 2026: Will My Whole Energy Bill Be Cheaper?
Not necessarily by the amount you might expect.
The VAT change is specifically about qualifying electricity. Gas remains subject to 5% VAT. That matters because many households pay for both electricity and gas on the same bill.
There is another reason your total bill may not simply fall. Ofgem’s price cap is increasing from 1 October 2026. For a typical dual-fuel household paying by Direct Debit, the cap rises from £1,663 to £1,723 a year, although the amount you actually pay depends on your energy use and circumstances.
The October price-cap figures already take the electricity VAT reduction into account. Ofgem says the average electricity unit rate for a standard variable tariff paid by Direct Debit will be 26.32p per kWh from October, with a daily standing charge of 54.83p. These electricity figures do not include VAT during the temporary zero-rate period.
So you could see your electricity costs fall while your total gas-and-electricity bill does not fall by the same amount. If you use a lot of gas, changes in gas costs can have a bigger effect on the overall bill.
If you want to understand the wider October energy changes, see our Energy Price Cap: What It Means for Your Bill.
What if I’m on a fixed electricity tariff?
The VAT reduction is not limited to people on standard variable tariffs. The government says it also applies to fixed energy tariffs where you have already locked in your rate.
Your fixed unit rate does not stop the VAT change from being applied. The VAT treatment changes even though the underlying tariff you agreed with your supplier remains fixed.
That means you should still see the benefit automatically if your electricity supply qualifies.
What if I use a prepayment meter?
If you use a prepayment meter, VAT is currently included when you add credit to your meter.
From 1 October 2026, VAT will no longer be applied to qualifying electricity. The government says you do not need to make a separate claim, and the change should be reflected automatically when you top up.
What if I rent my home?
If you pay your own electricity bill, the VAT reduction should work in much the same way whether you rent your home or own it.
If electricity is included in your rent, a service charge or another arrangement where you do not receive the electricity bill yourself, things can be different. You may not see a separate reduction because you are not the person being charged VAT directly by the electricity supplier.
If that applies to you, check your tenancy or payment arrangement rather than assuming the saving will automatically reduce what you pay your landlord.
What if I own my home?
If you receive a qualifying domestic electricity supply and pay your supplier directly, the VAT reduction should be applied automatically from 1 October.
You do not need to register for the scheme or submit a claim.
Does the electricity VAT cut apply where I live?
England
Yes. The temporary zero rate applies to qualifying domestic electricity supplies in England.
Scotland
Yes. Scotland is part of Great Britain for this VAT measure, so qualifying domestic electricity supplies are covered.
Wales
Yes. Qualifying domestic electricity supplies in Wales are covered by the temporary zero rate.
Northern Ireland
The Great Britain VAT change does not apply in Northern Ireland. Electricity there remains subject to the 5% reduced VAT rate.
However, Northern Ireland is not simply being left without support. A separate Household Electricity Discount Scheme is providing eligible households with a £63 electricity bill support payment in 2026. The support is due to be applied automatically through electricity suppliers, with the first payment expected from 6 October 2026.
That is a different scheme from the Great Britain VAT cut, so Northern Ireland should not be described as receiving the VAT reduction itself.
Do I need to do anything?
For most households covered by the change, no.
You do not need to apply for the VAT reduction. Your supplier should apply the new 0% VAT treatment automatically.
It is still sensible to check your first relevant bill after 1 October. Look at the electricity section, the VAT treatment and the dates covered by the bill. If you normally submit meter readings, keeping a reading around the changeover date can also give you a useful record.
Why could my electricity bill still go up?
Removing VAT does not freeze the underlying cost of electricity.
Energy prices can change because of wholesale costs, network costs and other elements that feed into the price cap. From 1 October 2026, Ofgem’s price cap for a typical dual-fuel household paying by Direct Debit rises by 4% to £1,723 a year.
That figure is not a prediction of what you personally will pay. The price cap limits unit rates and standing charges for people on default tariffs. Your actual bill depends on how much energy you use, where you live, your meter and how you pay.
The VAT reduction is already reflected in Ofgem’s October electricity rates, so it is important not to compare headline price-cap figures from different periods without taking the VAT change into account.
For the wider picture of what’s changing in October, you can also read our guide to the changes coming in October 2026.
What this means for you
If you pay your own electricity bill: You should automatically benefit from the 0% VAT rate if your supply qualifies.
If you’re on a fixed tariff: You should still benefit. The VAT change applies even though your underlying tariff is fixed.
If you use a prepayment meter: The VAT should stop being charged when you top up qualifying electricity from 1 October.
If you’re a renter and electricity is included in your rent: You may not receive a conventional electricity bill, so the way the saving reaches you can depend on your arrangement with your landlord or provider.
If you’re in Northern Ireland: The Great Britain VAT cut does not apply, but eligible households are due separate £63 electricity bill support in 2026.
How to check your bill
When you receive a bill covering the new VAT period, check:
- the electricity charges
- the VAT treatment shown on the bill
- the dates covered by the bill
- your electricity unit rate
- your daily standing charge
- how the amount compares with an earlier bill, bearing in mind that prices and your usage can change
If you think the VAT treatment on your qualifying electricity supply is wrong, contact your supplier and ask them to explain how they have calculated the bill.
What happens after March 2027?
The current measure is temporary and runs until 31 March 2027.
The government has confirmed the temporary zero rate for this period. What happens after that is not something this article will speculate about. If the rules change, What’s Changing UK will update this page.
Frequently asked questions
Is VAT being completely removed from electricity bills?
VAT is being reduced from 5% to 0% on qualifying domestic electricity supplies in Great Britain for the temporary period from 1 October 2026 to 31 March 2027. It is not a permanent removal of VAT from electricity.
Does the electricity VAT cut apply to Scotland?
Yes. Qualifying domestic electricity supplies in Scotland are covered.
Does it apply to Wales?
Yes. Qualifying domestic electricity supplies in Wales are covered.
Does it apply to England?
Yes. Qualifying domestic electricity supplies in England are covered.
Does it apply to Northern Ireland?
No. Northern Ireland remains at 5% VAT on qualifying electricity. Eligible households are instead receiving separate £63 electricity bill support in 2026.
Will my electricity bill automatically become cheaper?
The VAT element of a qualifying electricity bill should fall because the 5% VAT charge is removed. Your total bill may not fall by the same amount because your electricity use, tariff and other energy costs can change.
Do I need to contact my supplier?
No. The VAT reduction should be applied automatically. You can check your first relevant bill to make sure the change has been reflected.
Does the VAT cut apply to fixed tariffs?
Yes. The government has confirmed that the change also applies to fixed energy tariffs.
Does it apply to prepayment meters?
Yes. From 1 October 2026, VAT will no longer be applied to qualifying electricity when you top up.
Does the change apply to gas?
No. Domestic gas remains subject to 5% VAT.
How much money will I save?
The government estimates an average saving of £45 a year. Your actual saving will depend on how much electricity you use and the price you pay.
What if my bill covers September and October?
The VAT treatment needs to reflect the relevant period. Electricity supplied before 1 October does not become zero-rated simply because the bill is issued after the change.
Does the change affect the energy price cap?
Yes. Ofgem’s October 2026 price-cap figures already take the electricity VAT reduction into account. The cap nevertheless rises overall from October, largely because of higher underlying energy costs, particularly for gas.
Official sources
This article is based on information from HMRC, the Department for Energy Security and Net Zero, Ofgem and the Northern Ireland Department for the Economy.
