If you opened an electricity bill this month and noticed the VAT line has changed, you're not imagining it. From 1 October 2026, electricity supplied to homes in Great Britain is charged at 0% VAT instead of the usual 5%. The change is temporary and runs until 31 March 2027 — so it covers this winter, when most of us use the most power.
Here's what changed, who gets it, roughly how much it's worth, and the small things worth checking on your bill.
The short version: household electricity in England, Scotland and Wales is zero-rated for VAT from 1 October 2026 to 31 March 2027. You don't need to apply or switch — suppliers apply it automatically. Gas stays at 5%, and electricity in Northern Ireland stays at 5%.
What exactly has changed?
| Before 1 Oct 2026 | 1 Oct 2026 – 31 Mar 2027 | |
|---|---|---|
| Household electricity (Great Britain) | 5% | 0% |
| Household electricity (Northern Ireland) | 5% | 5% (no change) |
| Household gas (whole UK) | 5% | 5% (no change) |
| Business electricity above the domestic limits | 20% | 20% (no change) |
The relief applies to the whole electricity supply, including the standing charge, not just the units you use. HMRC set out the details in Revenue and Customs Brief 10 (2026).
Who gets 0% VAT on electricity?
The zero rate replaces the 5% reduced rate, so it applies to exactly the same supplies that used to qualify for 5%:
- Homes — houses, flats, caravans and houseboats used as a home. This is automatic.
- Charities — electricity used for a charity's non-business activities.
- Residential buildings such as care homes, children's homes, hospices and student halls.
- Very small business users — electricity supplied at no more than 1,000 kWh a month (about 33 kWh a day) is treated as domestic use for VAT, even if the customer is a business. That covers many small shops, studios and single-room offices.
If a supply is partly domestic and partly business, the whole supply gets the lower rate when 60% or more of it is for qualifying use. Below that, it's split between the rates.
How much will you save?
Removing 5% VAT takes one twenty-first off any electricity bill that previously included 5% VAT — about 4.8%. Here's what that looks like:
| Electricity bill (incl. 5% VAT) | VAT inside it | Same bill at 0% VAT |
|---|---|---|
| £60 a month | £2.86 | £57.14 |
| £90 a month | £4.29 | £85.71 |
| £120 a month | £5.71 | £114.29 |
| £900 a year | £42.86 | £857.14 |
Because the cut lasts six months, your actual saving is the VAT you would have paid on your electricity between October and March. For most homes that's the higher-use half of the year, so the saving is a little more than half the yearly figure.
Work out your own saving: put last winter's monthly electricity bill into the Reverse VAT Calculator with a 5% rate. The VAT figure it shows is roughly what you'll save each month.
A note of realism: the VAT cut lowers your bill compared with what it would otherwise have been. If unit rates or standing charges change at the same time, your bill may still go up or down overall.
What to check on your bill
- The VAT line. Electricity should show 0% VAT for usage from 1 October. If you're on dual fuel, the gas part should still show 5%.
- Bills that cross 1 October. If a bill covers late September and early October, part of it should be at 5% and part at 0%. HMRC recommends suppliers use meter readings to split it, so a meter reading around 1 October helps make the split accurate. Smart meters handle this automatically.
- Estimated bills. If your bill is estimated, give a reading so the zero rate is applied to the right amount of energy.
- Direct Debits. Your supplier may not change your Direct Debit straight away. Any difference should show up as credit on your account.
If your electricity still shows 5% VAT for October usage, contact your supplier and ask them to check the VAT rate on your account.
What about businesses?
For most businesses, nothing changes. Business electricity above the domestic limits stays at 20%. Where the zero rate does apply to a business (for example, a small unit using under 1,000 kWh a month), whether it's a real saving depends on VAT registration:
- Not VAT registered: you can't reclaim VAT, so 0% instead of 5% is a genuine saving.
- VAT registered: you usually reclaim the VAT on your electricity anyway, so the cut makes little difference to your costs — just less VAT to reclaim on your VAT return.
Not sure where you stand? See output VAT and input VAT explained.
What happens on 1 April 2027?
Unless the government extends it, household electricity goes back to 5% VAT from 1 April 2027. Bills that cross that date will be split again, so another meter reading at the end of March is a good idea. We'll update our UK VAT rates page if anything changes.
Frequently asked questions
Do I need to do anything to get 0% VAT on electricity?
No. If your home is in England, Scotland or Wales, your supplier applies it automatically from 1 October 2026.
Is gas included?
No. Gas and other heating fuels stay at 5% VAT.
Does it apply in Northern Ireland?
No. Household electricity in Northern Ireland stays at 5%.
Does it apply to prepayment meters?
Yes. It applies to domestic electricity however you pay, including prepayment meters.
Does charging an electric car at home count?
Charging at home is part of your normal household supply, so it gets the same 0% rate. Public chargers are a separate supply and are not covered by this change.
Does it apply to the standing charge?
Yes. The standing charge is part of the electricity supply, so it's zero-rated too.
The bottom line
It isn't a huge change on any single bill, but over a winter it adds up, and it happens automatically. Check that your electricity shows 0% VAT, give your supplier a meter reading, and keep an eye on the VAT line again in April.
Want to understand the rates in general? Read how much is VAT in the UK or browse our UK VAT questions.
Official sources: HMRC Revenue and Customs Brief 10 (2026) and VAT Notice 701/19: Fuel and power.