VAT · HOUSEHOLD ELECTRICITY
The electricity VAT cut: 0% VAT until 31 March 2027
VAT on household electricity in Great Britain is 0% from 1 October 2026 to 31 March 2027, down from 5%. Gas still carries 5% VAT.
VAT ON ELECTRICITY
0%was 5%, 1 Oct 2026 – 31 Mar 2027TYPICAL SAVING
£43a year at GB average rates and typical useOVER THE SIX MONTHS
£23at typical use, if today’s rates heldGOVERNMENT ESTIMATE
£45average household saving a yearWhat changed
Household electricity was previously charged VAT at the reduced rate of 5%. The government has applied a temporary zero rate to qualifying electricity supplies in Great Britain from 1 October 2026 to 31 March 2027. Suppliers previously added VAT to the electricity you used and the daily standing charge; GOV.UK now expects them not to charge VAT on household electricity bills at all. Ofgem’s price cap for October–December 2026 already reflects it: electricity unit rates and standing charges carry 0% VAT, while gas rates include 5%.
Who gets it
- Household electricity bills in Great Britain. You do not need to do anything to claim it.
- Electricity prepayment top-ups from 1 October 2026.
- Fixed electricity tariffs where the rate was already locked in.
- Small businesses, charities and residential care homes that already qualify for the reduced 5% VAT rate on electricity.
What it does not cover
- Gas, which stays at 5% VAT.
- Other domestic fuels, which stay at the reduced 5% rate across the UK.
- Electricity supplied in Northern Ireland, where qualifying supplies remain at the reduced 5% rate.
- Business electricity that is not a qualifying supply: the zero rate replaces the reduced rate only.
How much it saves
At Ofgem’s GB average Direct Debit rates (26.32p per kWh and 54.83p a day) and typical use of 2,500 kWh, electricity costs £858.13 a year. Adding 5% VAT to the same rates would cost £42.91 more, so that is the annual-rate saving. The government’s own estimate is an average of £45 a year per household, calculated on its own basis.
The relief lasts six months, not a year. Historically about 56% of household electricity use falls between October and March, so at typical use the saving over the relief period is about £23.47 if today’s rates applied throughout. Later cap periods have not yet been announced.
| Usage | Electricity a year | Annual cost at 0% VAT | 5% VAT would add (a year) | Saving, Oct 2026–Mar 2027 |
|---|---|---|---|---|
| Low | 1,600 kWh | £621 | £31.06 | £16.82 |
| Medium | 2,500 kWh | £858 | £42.91 | £23.47 |
| High | 3,800 kWh | £1,200 | £60.01 | £33.08 |
Saving by region
Because standing charges and unit rates vary, the saving at typical use ranges from £41.08 a year in London to £47.17 in Merseyside and Northern Wales.
| Region | Electricity cost a year (0% VAT) | 5% VAT would add (a year) | Saving, Oct 2026–Mar 2027 |
|---|---|---|---|
| East Midlands | £822 | £41.09 | £22.49 |
| Eastern England | £854 | £42.72 | £23.40 |
| London | £822 | £41.08 | £22.58 |
| Merseyside and Northern Wales | £943 | £47.17 | £25.72 |
| North Eastern England | £861 | £43.06 | £23.48 |
| North Western England | £829 | £41.45 | £22.76 |
| Northern Scotland | £860 | £43.00 | £23.52 |
| South Eastern England | £863 | £43.15 | £23.63 |
| South Western England | £867 | £43.37 | £23.72 |
| Southern England | £836 | £41.81 | £22.94 |
| Southern Scotland | £877 | £43.84 | £23.92 |
| Southern Wales | £866 | £43.30 | £23.68 |
| West Midlands | £849 | £42.44 | £23.18 |
| Yorkshire | £865 | £43.25 | £23.59 |
Frequently asked questions
When does the electricity VAT cut start and end?
VAT on household electricity in Great Britain is 0% from 1 October 2026 to 31 March 2027. Before that it was charged at the reduced rate of 5%.
Do I need to do anything to get it?
No. The government says you do not need to do anything to claim the saving; suppliers stop charging VAT on household electricity automatically.
Does the VAT cut apply to fixed tariffs and prepayment meters?
Yes. GOV.UK says it includes fixed tariffs where the rate was already locked in, and VAT no longer applies to electricity prepayment top-ups from 1 October 2026.
Is VAT removed from gas too?
No. Gas stays at 5% VAT. Ofgem confirms the change only applies to electricity bills.
Does it apply in Northern Ireland?
No. The zero rate applies only to supplies in Great Britain. In Northern Ireland, qualifying electricity supplies remain at the reduced 5% rate.
Do small businesses and charities benefit?
Yes, if their electricity already qualifies for the reduced 5% rate: for example small business use of an average of not more than 33 kWh a day, or 1,000 kWh a month, supplied to one customer at one set of premises, or a charity’s non-business use.
About these figures
Savings are calculated as 5% of the electricity cost at current price-cap rates, assuming your rates would otherwise be unchanged. The six-month figure applies the national household seasonal pattern from DESNZ (2023–2025) and holds today’s cap rates for the later months. Your own saving depends on your tariff and use.
Sources
- GOV.UK: Breathing space on your energy bill ↗Published 26 August 2026. Average saving, fixed tariffs, prepayment and eligible businesses.
- HMRC: Temporary zero rate of VAT in Great Britain for domestic electricity ↗Published 8 September 2026. Dates and Great Britain scope.
- HMRC: Fuel and power (VAT Notice 701/19) ↗Qualifying use and the de minimis limit.
- Ofgem: summary of changes to the energy price cap, 1 October to 31 December 2026 ↗Gas VAT unchanged.
- Ofgem: cap tables, October–December 2026 (PDF) ↗Regional electricity rates used in the savings table.
- Ofgem: energy price cap unit rates and standing charges ↗GB average rates.
- DESNZ: Energy Trends 5.2, quarterly electricity consumption ↗Household seasonal pattern, 2023–2025.
Last updated 11 October 2026. Figures are dated benchmarks taken from the sources above. How we use sources →