VAT taken off household electricity bills until March 2027

From 1 October 2026, VAT on qualifying supplies of household electricity in Great Britain is 0%, down from 5%. The zero rate runs to 31 March 2027. It was announced on 21 July 2026 and took effect on 1 October.

What is covered

The cut applies to qualifying electricity supplied in England, Scotland and Wales. In Northern Ireland, the rate on qualifying electricity stays at 5%.

Gas and other domestic fuel stay at 5% across the UK. The supplies that qualify are the same domestic supplies, and the same non-business supplies to charities, that already qualified for the 5% rate. Households do not claim the relief. Suppliers apply the rate on the bill.

How much a household saves depends on how much electricity it uses, and on the supplier passing the cut on. The government says the change takes about £45 a year off the Ofgem price cap. That is the effect on the annual cap, so it is not a fixed saving on every bill. A dual-fuel bill still includes VAT on the gas.

What sits outside the cut

The zero rate follows the existing rules for domestic use. Business electricity is outside it. Where a supply is split between business and domestic use, that split is unchanged. From 1 April 2027, qualifying electricity in Great Britain is due to return to 5%, unless the government extends the zero rate.

If you want to check how the change appears on a bill, contact us.