Households are expected to see a reduction in their electricity bills from today, 1 October 2026, as the government has removed VAT from household electricity bills. This measure is projected to lower the yearly Ofgem price cap by approximately £45.
Prime Minister Andy Burnham stated that the removal of VAT from electricity bills is part of a wider plan for 'everyday fixes' aimed at providing families with some breathing space. Chancellor of the Exchequer, John Healey MP, added that the tax cut will help keep energy bills down as winter approaches.
While around a third of households are on fixed tariffs and not directly affected by the Energy Price Cap rise, the government expects suppliers to pass on the VAT cut to these customers. The government also encourages individuals to compare deals for their homes.
Secretary of State for Energy Security and Net Zero, Miatta Fahnbulleh MP, noted that the VAT cut will make the energy price cap £45 a year less than it would have been. This follows £150 of costs removed from bills earlier in the year.