Energy bills
0% VAT on Electricity: What the October 2026 Cut Means for Your Energy Bills
From 1 October 2026, VAT on qualifying domestic electricity in Great Britain is temporarily reduced from 5% to 0%. Here is what changes, how long it lasts, what the Government expects it to save, and what, if anything, you need to do.
Updated: 1 October 2026
The change
What changed on 1 October?
From 1 October 2026, VAT on qualifying domestic electricity in Great Britain is temporarily reduced from 5% to 0%. The reduced rate applies to the electricity you buy from your supplier, and it is applied through electricity suppliers rather than through any separate scheme.
Domestic gas remains subject to 5% VAT, so for a household with both fuels only the electricity element of the bill is affected.
The reduction is temporary. The measure runs from 1 October 2026 until 31 March 2027.
Savings
How much could households save?
The Government estimates the electricity VAT cut reduces the annual Ofgem price cap by around £45. That is an estimate for a typical household, not a guaranteed amount on any individual bill.
VAT is charged as a percentage, so the cash benefit scales with how much electricity you buy. A household that uses more electricity than average should see a larger reduction, while a lower use household will see less. The figure also applies to the price cap itself, so what you actually pay still depends on your tariff, your usage and where you live.
Action needed
Do you need to do anything?
No. Households do not need to apply. The VAT reduction is applied through electricity suppliers, so it should appear on bills automatically for electricity supplied from 1 October 2026.
If a bill after that date still shows 5% VAT on your electricity, raise it with your supplier.
Don't confuse the two
Electricity VAT vs solar and battery VAT
This temporary cut is separate from the existing 0% VAT treatment for qualifying professionally installed energy saving measures, such as solar panels and battery storage.
The two rates apply to different things. The new 0% rate is a temporary reduction on the electricity you buy from the grid, in place until 31 March 2027. The existing 0% VAT treatment applies to the installation of qualifying energy saving measures carried out professionally, and it is not a temporary measure tied to these dates.
If you are weighing up generating or storing your own electricity, our overview of energy grants explains the wider funding landscape.
Common questions
Electricity VAT FAQs
Do I need to apply for the 0% VAT rate?
No. The VAT reduction is applied through electricity suppliers, so it appears on bills automatically. There is no form to complete and no claim to make.
Does 0% VAT apply to gas as well?
No. Domestic gas remains subject to 5% VAT. The temporary reduction applies to qualifying domestic electricity.
How long will electricity stay at 0% VAT?
The measure runs from 1 October 2026 until 31 March 2027. After that, the rate could change, so it is worth checking the latest government guidance nearer the time.
How much could I save?
The Government estimates the electricity VAT cut reduces the annual Ofgem price cap by around £45. VAT is charged as a percentage of what you pay, so your own saving depends on how much electricity you use.
Does this change the 0% VAT on solar panels and batteries?
No. They are separate things. The temporary 0% rate applies to the electricity you buy from the grid. The existing 0% VAT treatment for qualifying professionally installed energy saving measures, such as solar panels and battery storage, is unaffected.