UK Electricity VAT Calculator
0% VAT from 1 October 2026

1 October 2026. The Government announced on 21 July 2026 that VAT on domestic electricity would be cut from the 5% reduced rate to a 0% zero rate, taking effect from 1 October 2026 — the same day Ofgem's October–December price cap begins.

Ofgem's published cap rates for that period already reflect it: the electricity unit rate of 26.32p/kWh and standing charge of 54.83p/day are stated as not including VAT from 1 October 2026 to 31 March 2027. You do not need to apply or claim; suppliers apply the zero rate to domestic supplies automatically, and the Government has said it expects all suppliers to pass the reduction on to every customer, including those on fixed tariffs.

No. This is the single most common error in coverage of the measure, which is usually reported as VAT being scrapped on 'energy bills'. The zero rate applies to domestic ELECTRICITY only.

Domestic gas stays at the 5% reduced rate, and Ofgem's gas cap figures for October–December 2026 (7.97p/kWh and a 29.68p/day standing charge) are published including that 5%. For a dual-fuel household the practical effect is that the blended VAT rate across the whole energy bill does not fall to zero — it falls from 5% to roughly 2.5–2.7%, because rather more than half of a typical annual energy bill by value is gas.

This calculator shows that blended rate explicitly so the saving is not overstated.

No. The zero rate applies in Great Britain — England, Scotland and Wales. Northern Ireland remains subject to EU VAT rules under the Windsor Framework, which do not permit a new zero rate to be introduced, so domestic electricity in Northern Ireland stays at the 5% reduced rate.

The Government's stated response is fiscal rather than tax-based: the Northern Ireland Executive receives comparable funding to enable it to support NI households. If you are in Northern Ireland, set the region switch on this calculator to Northern Ireland — your VAT saving from this measure is nil, and any support instead depends on what the NI Executive does with that funding.

It is temporary as announced. GOV.UK says the measure is funded for the 2026-27 financial year, and Ofgem's price cap wording bounds it precisely: the electricity rates exclude VAT 'from 1 October 2026 to 31 March 2027'.

That is 182 days, not a full year. Any extension is a decision for the Autumn Budget on 28 October 2026 and has not been announced.

This matters for how you read the headline figure: the widely-reported saving of around £45 is an annualised rate, so a typical household on the cap actually receives roughly £23 across the six-month window as currently funded. Treat anything beyond 31 March 2027 as unannounced rather than expected.

The saving is 5% of your electricity bill excluding VAT, so it scales directly with how much electricity you use. The Government's figure is around £45 off the yearly Ofgem price cap.

That is reproducible: at the October cap rates, a household using about 2,700 kWh a year pays roughly £911 for electricity before VAT (2,700 × 26.32p, plus 365 days of the 54.83p standing charge), and 5% of that is about £45.54. A low-use household at 1,800 kWh saves closer to £34; a high-use or all-electric household at 4,500 kWh saves about £69.

Because the standing charge is also within scope, even a very low-consumption household saves about £10 a year on the standing charge alone. Enter your own annual kWh from a recent bill or annual statement for a figure specific to you.

Some do, through the existing domestic-rate relief rather than as a new business measure. Small businesses that qualify for domestic energy VAT relief and are not registered for VAT, together with charities and residential care homes already eligible for the 5% reduced rate, move to 0% on their electricity from 1 October 2026.

Eligibility runs through the existing VAT certificate and declaration process — the usual route is the de minimis threshold or a qualifying-use declaration where at least 60% of the supply is for a qualifying purpose. A VAT-registered business paying the standard 20% rate on electricity is not affected and continues to recover input VAT in the normal way, so the measure is neutral for it.

If you already hold a certificate for the reduced rate you should not need to do anything new.

The Government has said it expects all suppliers to pass the VAT reduction on to all customers, including those on fixed tariffs, as they did with the £150 of costs taken off bills announced at the previous Budget. VAT is a tax charged on top of the supply rather than part of a supplier's own pricing, so a fixed contract fixes the unit rate and standing charge, not the tax applied to them — the mechanics point the same way as the expectation.

It is still worth checking your first bill dated on or after 1 October 2026: the VAT line on a domestic electricity account should read 0.00, and it is the electricity account you need to look at, because the gas VAT line should still show 5%.

Domestic fuel and power was zero-rated until 1994, when VAT was introduced on it at 8%. The rate was due to rise to 17.5% in 1995 but the increase was defeated in the Commons, and in September 1997 it was cut to 5%, where it stayed for both electricity and gas for nearly three decades.

From 1 October 2026 domestic electricity in Great Britain moves to 0% while gas remains at 5% — the first time the two fuels have carried different VAT rates in that period. This is also why the change is administratively straightforward for suppliers: the reduced-rate machinery, including the qualifying-use declarations for charities and small businesses, already exists and the zero rate is applied through it.