What it means for your home or business
Households across the UK are in line for a welcome cut to their electricity bills this autumn, from 1 October 2026 VAT will be removed entirely from household electricity, following the tax cut announced by the Prime Minister in July.
The change is expected to save the average household around £45 a year. It also helps limit the rise in Ofgem’s energy price cap and comes on top of £150 of costs already removed from bills earlier this year.
What it means for you
You don’t need to do anything to benefit. At the moment, suppliers apply 5% VAT to the electricity you use plus your daily standing charge. That 5% drops to 0% from 1 October, so we expect all suppliers to stop charging VAT on electricity, including on fixed tariffs where you’ve already locked in your rate.
The exact saving will depend on the unit price your supplier sets and how much electricity you use.
On a pre-payment meter? VAT is currently charged automatically when you top up your key or card, from 1 October, that VAT will no longer apply.
A further £150 off this winter
Around 6 million households are also eligible for the Warm Home Discount this winter, worth an extra £150 off electricity bills. It’s worth checking whether you qualify: Warm Home Discount scheme.
Businesses, charities and care homes
Small businesses, charities and residential care homes that already qualify for the reduced 5% VAT rate, including through the existing VAT certificate and declaration process, will also move to the 0% rate this winter.
How long will it last?
The VAT cut has been funded for the 2026 to 2027 financial year. The government has said it will keep looking at further ways to protect households from unaffordable bills.
Turning short-term relief into lasting savings
This VAT cut is real, immediate help, but it is temporary. The most reliable way to bring bills down for good is to use less energy in the first place.
That’s where we come in, for eligible homeowners, landlords, commercial and public buildings, our custom solar PV and energy efficiency systems reduce reliance on the grid and offer protection against future price rises.
The tax break gives you breathing space this winter. A proper efficiency plan gives you savings that last well beyond it.
Want to make the most of it? Talk to our team about a solar and energy efficiency plan for your home or organisation.
*Source: adapted from “Breathing space on your energy bill,” Department for Energy Security and Net Zero, [published 26 August 2026](https://www.gov.uk/government/news/breathing-space-on-your-energy-bill).
