From 1 October 2026 – 31 March 2027 households in Scotland, Wales and England will pay zero VAT on their electricity.
To help people with the cost of living the UK government has temporarily cut VAT on domestic electricity prices. This page looks at how the reduction might affect you.
What does the VAT cut on electricity mean?
VAT (Value Added Tax) is a tax that’s added to most goods and services. It’s always a percentage of the full amount. For most goods and services VAT is set at 20%, but for home energy (gas, electricity, LPG and heating oil) it’s usually set at a lower rate of 5%.
From October 2026 until March 2027 you won’t pay any VAT on your electricity bill. This means your energy supplier will not add the usual 5% to your electricity costs.
Does the VAT cut on electricity mean I’ll save money?
The 5% reduction doesn’t automatically mean your energy bills will be lower. Whilst the UK Government estimates households will save £45 over the year, your electricity costs still depend on how much energy you actually use. If you use more this month than you did last month, your bill will be higher.
The VAT cut also comes in at the same time that the Energy Price Cap rises by 4%. That means if you’re on a variable tariff your energy prices will have increased at the start of October.
It’s also worth remembering that the VAT cut only applies to electricity. If you use gas, heating oil or LPG (Liquid Petroleum Gas) you’ll still pay the standard 5% VAT on these fuels.
What does Changeworks advise?
It’s still really important to save energy wherever you can. Our Saving energy in the home pages can help.
We’d also recommend checking what financial support you’re entitled to. Some schemes, like the Warm Home Discount and the Emergency Heating Oil Scheme, are currently open for a limited time, so make sure to apply as soon as you can.
If you’re struggling with fuel debt or energy issues you can freephone our Affordable Warmth Service team on 0800 870 8800 9am-5pm, Monday-Friday.