VAT on household electricity in Great Britain is 0% from 1 October 2026 to 31 March 2027. Before the cut it was 5%, and it goes back to 5% on 1 April 2027 unless the government extends it. Gas is not included, and Northern Ireland stays at 5%.
The government estimates the saving at about £45 a year for a typical household. This guide explains what the cut covers, why your October bill may only be partly cheaper, and what it means if you run a business, work from home or charge an electric car.
How much VAT is on electricity bills?
| Who is supplied | VAT rate until 30 Sep 2026 | VAT rate 1 Oct 2026 – 31 Mar 2027 | |---|---|---| | Homes in England, Scotland and Wales | 5% | 0% | | Homes in Northern Ireland | 5% | 5% | | Charities (non-business use) | 5% | 0% | | Businesses (normal use) | 20% | 20% | | Public EV charge points | 20% | 20% |
Gas and other domestic fuels stay at 5%. HMRC says only electricity is affected.
The October electricity bill VAT reduction
The cut was announced on 21 July 2026 and HMRC published the detail in Revenue and Customs Brief 10 (2026) on 8 September. Suppliers apply it automatically, so you don't need to do anything, and it applies whatever tariff you're on, including fixed deals.
Why your October bill may still show some VAT. If your billing period straddles 1 October, suppliers can split the bill by when you used the electricity. HMRC recommends using meter readings to do this. A bill covering 15 September to 14 October could therefore charge 5% on the September half and 0% on the October half. Submitting a meter reading on or around 1 October gives the most accurate split.
Why the saving feels small. VAT was only 5% to begin with, so removing it cuts a bill by just under 5%. On a £100 monthly electricity bill that is about £4.76.
Will it be extended? The cut is temporary. Watch the Autumn Budget for any announcement before 31 March 2027.
Does the VAT cut apply to business electricity?
Usually not. Business electricity is normally charged at the standard rate of 20%, and that hasn't changed.
There are two exceptions, set out in HMRC's VAT Notice 701/19 (Fuel and power):
- Small users (de minimis). If a business uses no more than 33 kWh a day on average, or 1,000 kWh a month, at one premises, the supply has been charged at the reduced rate rather than 20%. HMRC says the supplies that qualify have not changed, so these supplies should be zero-rated during the relief. Check your bill shows the right rate.
- Mixed use. Where at least 60% of a supply is for domestic or charity non-business use, the whole supply qualifies for the lower rate. Below 60%, the supplier splits it, usually based on a certificate the customer gives them.
If you're VAT registered and use electricity wholly for business, the rate makes little difference to your costs, because you reclaim the VAT as input tax on your VAT return. The change mostly shows up as a smaller figure in Box 4.
Working from home: what the cut means for your claim
If you're a sole trader, landlord or director working from home, your home supply is domestic, so it's 0% VAT until March 2027.
- Not VAT registered? You just pay less. If you claim the business share of household bills (or use HMRC's flat-rate use of home amounts), nothing else changes.
- VAT registered and reclaiming the business share of home electricity? There is no VAT to reclaim on bills charged at 0%. For a bill that straddles 1 October, only reclaim the VAT actually shown on it.
EV charging: domestic VAT exemption and public chargers
- Charging at home on your domestic supply is part of your household electricity, so it carries 0% VAT until 31 March 2027.
- Public charge points are always standard-rated at 20%, however little you use. VAT Notice 701/19 says so, and the cut doesn't change it.
- Workplace chargers at business premises follow the business rate (normally 20%).
For businesses reimbursing employees for home charging, keep the receipts. You can only reclaim VAT that was actually charged.
Checklist for VAT-registered businesses
- Check your electricity bills from October onwards and confirm the VAT rate shown is right for your type of supply.
- Don't reclaim 5% or 20% on a bill that shows 0%. Reclaim only the VAT on the invoice.
- Split bills that straddle 1 October as the supplier has, not by your own estimate.
- Small premises (shops, workshops, offices under the de minimis limits): ask your supplier why if you're still charged 20%.
- Recalculate any home-working VAT claim for October 2026 to March 2027.
- Diary 1 April 2027, when domestic electricity goes back to 5% unless the cut is extended.
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Frequently asked questions
How much VAT is on electricity in the UK now? 0% on household electricity in England, Scotland and Wales from 1 October 2026 to 31 March 2027. It's 5% in Northern Ireland, and normally 20% for businesses.
Is gas included in the VAT cut? No. VAT on household gas stays at 5%.
Do I have to do anything to get the electricity VAT cut? No. Your supplier applies it automatically. Sending a meter reading around 1 October helps make the split accurate.
Does the cut apply to my small business? Only if your use is under the de minimis limits (33 kWh a day or 1,000 kWh a month) or mostly domestic or charitable. Otherwise business electricity stays at 20%.
Is home EV charging VAT-free? Charging on your domestic supply carries 0% VAT during the relief. Public charge points stay at 20%.
When does the electricity VAT cut end? 31 March 2027, unless the government extends it.
This article is general guidance based on HMRC's Revenue and Customs Brief 10 (2026) and VAT Notice 701/19 as of October 2026, and is not tax advice.