Your electricity bill gets cheaper from 1 October — what the VAT cut means for you
Key points
- From 1 October 2026, the 5% VAT on your electricity bill is removed — your supplier applies the cut automatically, so you do not need to do anything.
- If you have a prepayment meter, every top-up you make from 1 October onwards will be VAT-free, which means you get more electricity for the same money.
- Citizens Advice can check whether you also qualify for energy hardship grants or the Warm Home Discount on top of the VAT saving.
From 1 October 2026, the government is removing VAT from your household electricity bill. That means no extra tax on the electricity part of what you pay — until 31 March 2027.
You do not need to do anything. The change is automatic. Your supplier applies it from 1 October onwards.
What changes on 1 October
Your electricity bill currently includes 5% VAT on the unit rate and standing charge. From 1 October that 5% is removed. You will pay less for every unit of electricity you use.
If you have a prepayment meter — the kind where you top up using a key, card, or app — the same applies. Every time you top up after 1 October, you will not pay VAT. That means you get more electricity for the same money.
What stays the same
Gas bills keep their 5% VAT. This cut is for electricity only.
The Ofgem energy price cap for electricity also rises by 4% on 1 October. The VAT cut helps offset some of that rise on the electricity part of your bill, so your electricity costs will be lower than they would have been without it.
If you pay one combined bill for gas and electricity, the cut applies to the electricity portion only.
Who benefits most
Everyone who pays an electricity bill gets this saving automatically. But you save more if you use a lot of electricity.
If your home is all-electric — electric storage heaters instead of a gas boiler, for example — the cut covers your whole energy bill. That is common in older private rented homes, particularly flats and bedsits.
If you are on Universal Credit or Housing Benefit and use a prepayment meter, this cut is especially helpful because there is nothing to do. The saving is built into the price the moment you top up.
Search for your next property on DSSmove →What you can do now
Check your meter type if you are unsure. If you are on a prepayment meter and struggling to afford top-ups before October, contact your energy supplier. Most large energy companies run a hardship fund that is separate from the Warm Home Discount — you may qualify even if you have not heard of it.
If your bill still shows VAT on electricity after 1 October, check it carefully and contact your supplier. They are required to remove it.
Citizens Advice can check every energy grant, hardship payment, and benefit you might be missing — call free on 0800 144 8848 or visit their website.
When the cut ends
This is a temporary measure. From 1 April 2027, the 5% VAT on electricity returns unless the government chooses to extend it.
If you currently owe money to your supplier, sorting a repayment plan now puts you in the best position to benefit fully from October. Citizens Advice can help you work out an arrangement your supplier must accept.
Frequently asked questions
What if I am still struggling to afford my energy bills after the VAT cut?
Contact Citizens Advice on 0800 144 8848 — they can check every energy grant and hardship fund you might be missing and help you negotiate an affordable repayment plan with your supplier.
Does the VAT cut apply in Scotland and Wales too?
Yes — the cut applies across England, Scotland, and Wales. Northern Ireland has a separate energy market with its own pricing, so contact your supplier there for details.
Official source: https://www.gov.uk/government/news/breathing-space-on-your-energy-bill