VAT on electricity to be cut

The new Prime Minister has announced a cut to the rate of VAT on electricity from 1 October. What’s the full story?

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Andy Burnham’s first tax policy has been announced. From 1 October to 31 March 2027, VAT will be cut from household electricity bills.

The policy is supposed to help with the cost of living, but in reality, will save an average household just £45.

The rate of VAT will be cut from 5% to zero for six months, and any further changes will be announced in the next Budget. The VAT rate should be passed on to customers in England, Wales and Scotland, with similar support being rolled out in Northern Ireland. The cut applies even if you’re on a fixed tariff, but note it only applies to electricity bills, not gas

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