No VAT on electricity until March 2027: what changes on your bill?

From 1 October 2026 until 31 March 2027, households in England, Scotland and Wales pay no VAT on electricity, down from 5%. It's applied automatically, covers fixed, variable and prepayment customers, and the government puts the average saving at about £45 a year. Gas still carries 5% VAT.

This guide explains what has changed, what it's worth for your home, and the few things worth checking so you actually get it.

This is general information, not legal or financial advice. Figures are as of 2 October 2026.

What exactly has changed?

Household electricity used to be charged VAT at the reduced rate of 5%. HMRC has set a temporary zero rate for "electricity supplied for domestic use or for a charity's non-business use" from 1 October 2026 to 31 March 2027 (HMRC brief published 8 September 2026).

Three points matter:

• It's electricity only. HMRC says "other fuel types are not affected by this change", so gas, heating oil and LPG stay at 5%.
• It's Great Britain only. In Northern Ireland, electricity stays at 5% VAT.
• The same supplies qualify as before. HMRC says "there are no changes to the supplies of electricity that qualify for relief". If you paid 5% before, you pay 0% now.

The government says the cut "has been funded for the 2026 to 2027 financial year", which ends on 31 March 2027. Whether it continues after that depends on a future decision, so treat it as temporary.

Do I need to do anything to get it?

No. GOV.UK says: "You do not need to do anything to claim the savings." Your supplier applies the new rate itself.

It also says the cut applies to "fixed energy tariffs where you have already locked in your rate", and that for prepayment, "From 1 October 2026, VAT will no longer be applied" when you top up.

How much will it save me?

The government's figure is an average of £45 a year per household. Ofgem says that without the VAT change, the typical bill under the October cap would have been "around £45 higher" than the £1,723 it announced.

Your own saving depends on how much electricity you use. Ofgem's cap for 1 October to 31 December 2026 (Direct Debit, average across Great Britain) is:

The right-hand column is our own sum (the cap rate × 1.05), shown only to make the difference visible.

A simple way to work out your saving:

• Usage: every 1,000 kWh costs £263.20 at the cap rate, against £276.36 with 5% VAT. That's about £13 saved per 1,000 kWh.
• Standing charge: 54.83p a day for a year is £200.13, so 5% would have been about £10 a year.

So a home using 2,000 kWh of electricity a year saves roughly £26 on usage plus £10 on standing charges over a full year. Over the six months the cut lasts, it's about half that. Homes with electric heating, a heat pump or an electric car will save more. Your annual kWh is on your bill or in your supplier's app; our free estimator can help you sanity-check your total.

Why did the price cap still go up if VAT came off?

Two things happened at once. Ofgem raised the cap by 4%, taking the typical dual fuel bill from £1,663 to £1,723 a year. Ofgem says gas bills rose about 8%, while electricity bills rose by less than 1% for homes without gas, because the VAT cut offset most of the electricity increase.

So if you use gas for heating, your total bill this winter is still likely to be higher than last quarter. See our price cap guide for the full figures.

What about bills that straddle 1 October?

Many bills cover a period that starts before 1 October and ends after it. HMRC lets suppliers work out the VAT "based on the date the energy is consumed", and it recommends "using meter readings to work out how much of a supply is subject to each VAT rate". Other methods are allowed "if they produce a fair and reasonable outcome".

In practice, if your supplier doesn't have a reading close to 1 October, it may split your usage by estimate. A reading taken as near to 1 October as possible gives the most accurate split. If you missed the date, a reading now still helps: it stops further estimates and gives your supplier a firm figure to bill from.

Take a photo of your meter showing the date, and submit the reading through your supplier's app or website. If you have a working smart meter, it should send readings itself, but it's worth checking the app shows a reading from around 1 October.

Will my Direct Debit go down?

Not necessarily straight away. Your Direct Debit is set to spread a year's costs, and suppliers review it from time to time. The VAT cut lowers your electricity cost, but the 4% cap rise and higher winter use pull the other way.

If you're on a fixed tariff, check that your first bill after 1 October shows VAT at 0% on the electricity lines and 5% on gas. If your account has built up a lot of credit, you can ask your supplier to review your payment. Our guide to the average energy bill can help you judge whether your payment is in the right range.

How do I check the VAT on my bill?

Look for the VAT line on your bill or online statement. From 1 October you should see:

• Electricity: VAT at 0% on both the unit charges and the standing charge.
• Gas: VAT still at 5%.
• A split period: if the bill covers days before and after 1 October, the earlier days may show 5% and the later days 0%.

If 5% VAT appears on electricity used after 1 October, contact your supplier and ask them to correct it. Put it in writing so you have a record. If it isn't fixed, you can use your supplier's complaints process and, after 8 weeks or a deadlock letter, the Energy Ombudsman.

Is there anything to watch out for?

• Sales calls using the VAT cut. The saving is automatic. Nobody needs your details, a payment or a switch for you to get it.
• Planning for April 2027. Unless the government extends it, 5% VAT returns on 1 April 2027. Budget for a small rise then.
• Paying through a landlord. If your landlord recharges electricity from a meter they control, check whether they've passed on the change.
• Extra help. GOV.UK notes that around 6 million households also qualify for the Warm Home Discount of £150 off electricity bills this winter.

What to do next

• Find your annual electricity use (kWh) on your last bill or app and work out your rough saving: about £13 per 1,000 kWh, plus about £10 a year on the standing charge.
• Submit a meter reading now, with a dated photo, if your supplier doesn't have one from around 1 October.
• Check your first bill after 1 October: 0% VAT on electricity, 5% on gas.
• Ask your supplier to correct any 5% VAT on electricity used from 1 October.
• Ignore anyone who says you must switch or pay to "claim" the VAT cut.
• Note 1 April 2027 in your diary as the date VAT is due to return.
• Use the estimator to check what a fair bill looks like for your home.