VAT on Household Electricity to Be Scrapped from October 2026
The UK government has announced the removal of Value Added Tax (VAT) on household electricity bills from October 2026, expected to save typical households around £45 annually. The move applies 5% VAT relief to all domestic electricity consumers across England, Wales, and Scotland.
In a cost-of-living support measure, the Government announced the planned removal of VAT on household electricity from October 2026, which the Government estimates could reduce average household bills by around £45 a year. Household electricity is currently subject to VAT at 5%.
This change will take effect across all UK domestic properties, reducing what householders pay on their quarterly or monthly electricity bills automatically. The relief applies to standard tariffs and will be processed by suppliers without requiring homeowners to apply or claim.
What Changes
- VAT on domestic electricity bills falls from 5% to 0% from October 2026
- Expected saving of approximately £45 per year for average households
- Relief applies automatically through billing; no action required from consumers
- Other utilities (gas, water) remain unchanged
For expats and foreign residents, this is a straightforward saving on household running costs. Renters will see lower bills if landlords pass the relief through; owner-occupiers will benefit directly. The government estimate of £45 annual savings assumes average consumption—actual savings depend on usage and regional electricity rates.
Sources
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