VAT has been removed from household electricity bills across Great Britain from 1 October 2026, HM Treasury announced. The government says the change keeps the Ofgem energy price cap about £45 a year lower than it would have been for October to December.
Price cap still rising
Ofgem’s cap for October to December rises by 4% for a typical dual-fuel household paying by Direct Debit, according to the regulator. Its published average electricity unit rate is 26.32p per kWh with a daily standing charge of 54.83p, now without VAT. Gas still carries 5% VAT. Ofgem says households that use mostly or only electricity may see a bigger reduction.
Fixed tariffs
Around a third of households are on fixed tariffs and unaffected by the cap rise. The government says it expects suppliers to pass the VAT cut to them as well, and encourages people to shop around.
Part of a wider package
Ministers present the measure as one of a series of cost-of-living “everyday fixes”, alongside a £2 bus fare cap and action on fake discounts and subscription traps. Ofgem says the VAT removal runs until 31 March 2027.
