VAT cut on electricity bills: what you'll save, and why Northern Ireland is different
From 1 October 2026 to 31 March 2027, there's no VAT on household electricity in England, Scotland and Wales. It was previously charged at 5%. The government says this saves a typical household about £45 a year. Northern Ireland is treated differently, which we explain below.
The key facts
- What's cut: VAT on domestic electricity, from 5% to 0%, including the standing charge.
- What isn't: gas, heating oil and LPG still carry 5% VAT.
- How long: six months, ending on 31 March 2027 unless the government extends it.
- What you need to do: nothing. Suppliers apply it automatically, including on fixed tariffs and prepayment meters.
How much will you actually save?
Removing 5% VAT doesn't take 5% off your bill. Because VAT was added on top of the price, taking it away cuts a VAT-inclusive bill by about 4.76%. It's the same sum as removing VAT from any price, which we explain in how to remove VAT.
Here's what that means depending on how much you spend on electricity a year (at the old, VAT-inclusive prices):
| Yearly electricity spend | Saving over a full year | Saving over the six months |
|---|---|---|
| £600 | £28.57 | £14.29 |
| £800 | £38.10 | £19.05 |
| £1,000 | £47.62 | £23.81 |
| £1,200 | £57.14 | £28.57 |
| £1,500 | £71.43 | £35.71 |
Most households use more electricity in winter, so the six-month saving may be a little higher than half the yearly figure.
Why your bill might still go up
The energy price cap changed on the same day. Ofgem's average capped electricity rate from October is 26.32p per kWh with no VAT, which would have been about 27.64p with VAT. Gas, which keeps its 5% VAT, rose in price. So homes heated by gas may see their total bill rise even with the electricity saving, while all-electric homes do better.
What it means for electric car owners
If you charge an EV at home, your charging is VAT-free too, including on EV off-peak tariffs. A car covering 10,000 miles a year at 3.5 miles per kWh uses about 2,860 kWh. At the average capped rate, losing the VAT saves roughly £38 a year, or about £19 over the six months. Small, but it widens the gap with petrol further. See our home charging cost guide for the full per-mile maths.
Northern Ireland: a £63 credit instead
The VAT cut doesn't apply in Northern Ireland, where electricity stays at 5% VAT. Under the post-Brexit Windsor Framework, EU VAT rules still cover goods in Northern Ireland, including electricity, so the UK can't simply zero-rate it.
Instead, around 860,000 NI households get a one-off £63 Household Electricity Discount from 6 October 2026. It combines the equivalent of the VAT cut with existing support towards renewables costs on bills.
- It's automatic. No forms, not means-tested, and it doesn't depend on how much you use.
- Bill payers will see it on their account as "NIRO & VAT Govt Credit".
- Keypad customers get it when they top up. To receive the full £63 in one go, top up by no more than £112. A bigger top-up means part of the credit arrives with your next one.
The scheme is due to continue in 2027 and 2028, with the amounts confirmed nearer the time.
Check your bill
In Great Britain, your first bill covering October should show 0% VAT on the electricity part and 5% on gas. If your billing period started before 1 October, your supplier may split it, charging VAT on electricity used before that date. If electricity VAT still appears after October, contact your supplier.
Work out your own figures
Use the VAT calculator to remove 5% VAT from your electricity spend and see your exact saving, or the EV running cost calculator with your new rate if you drive electric.
Published 3 October 2026. Rules and dates are correct at the time of writing; the Autumn Budget on 28 October 2026 may bring changes.