# Cut taxes on energy bills

> “We’re taking immediate action to cut taxes on energy bills, put more money in people’s pockets and bring back hope.”
>
> — Andy Burnham, Prime Minister, Labour Party; No 10 press release, 21 July 2026

- **Status:** Delivered
- **Status ladder:** Promised → In plan → Legislated → Funded → Delivering → Delivered
- **Policy area:** [Taxes](https://ledgergov.uk/promises/area/taxes)
- **Speaker:** [Andy Burnham](https://ledgergov.uk/actor/andy-burnham), Prime Minister
- **Party:** [Labour Party](https://ledgergov.uk/actor/labour)
- **Made on:** 21 July 2026
- **Where:** No 10 press release
- **Deadline:** 1 October 2026
- **Cost a year:** Costs £0.77bn to £0.94bn a year (central £0.85bn)
- **Who it affects:** Households in Great Britain paying for domestic electricity (VAT cut from 5% to 0%), plus eligible charities, care homes and non-VAT-registered small businesses that qualify for domestic energy VAT relief; Northern Ireland gets comparable funding instead
- **When:** 1 October 2026 to 31 March 2027
- **Paid for by:** Cancellation of the Digital ID programme (£1.8bn over the next three years)
- **Quote source:** https://www.gov.uk/government/news/new-pm-cuts-tax-on-household-electricity-bills-to-give-breathing-space-on-cost-of-living (checked word for word on 6 October 2026; Open Government Licence v3.0)
- **Last updated:** 6 October 2026
- **Card:** https://ledgergov.uk/promise/uk-electricity-vat-2026

## Where it stands

A Treasury order made on 7 September 2026 zero-rates domestic electricity in Great Britain from 1 October 2026, and the government confirmed the cut took effect that day. The zero rate is temporary and ends on 31 March 2027; Northern Ireland gets comparable funding instead because EU VAT rules apply there.

## Timeline

- 21 July 2026, Promised: PM announces VAT will be removed from household electricity bills from 1 October 2026
- 7 September 2026, Legislated: Treasury makes the order zero-rating domestic electricity from 1 October 2026 to 31 March 2027 ([evidence](https://www.legislation.gov.uk/uksi/2026/987/contents/made))
- 1 October 2026, Deadline: Due to start
- 1 October 2026, Delivered: Zero rate of VAT on domestic electricity in force ([evidence](https://www.gov.uk/government/news/energy-bill-tax-cut-starts-today-to-give-families-breathing-space))

## About the cost

Year shown: 2026-27, the only year of the measure, which covers six months (1 October 2026 to 31 March 2027); central figure only. Government estimate: around £850m, based on estimated electricity prices. There is no independent costing yet; the government says updated costs will be set out at the Budget. Low–high is an editorial ±10% because the source gives a central figure only.

Costing sources:
- [No 10 press release, 21 Jul 2026: New PM cuts tax on household electricity bills](https://www.gov.uk/government/news/new-pm-cuts-tax-on-household-electricity-bills-to-give-breathing-space-on-cost-of-living)

## Corrections

- 6 October 2026, the who in version 1: The press release says Northern Ireland gets "comparable" funding, not "equivalent" funding. It also names small businesses that are not registered for VAT and qualify for domestic energy VAT relief, which the entry left out. Was: “Households in Great Britain paying for domestic electricity (VAT cut from 5% to 0%), plus eligible charities and care homes; Northern Ireland gets equivalent funding instead”. Now: “Households in Great Britain paying for domestic electricity (VAT cut from 5% to 0%), plus eligible charities, care homes and non-VAT-registered small businesses that qualify for domestic energy VAT relief; Northern Ireland gets comparable funding instead”. ([source](https://www.gov.uk/government/news/new-pm-cuts-tax-on-household-electricity-bills-to-give-breathing-space-on-cost-of-living))

## Sources

- [No 10 press release, 21 Jul 2026: New PM cuts tax on household electricity bills](https://www.gov.uk/government/news/new-pm-cuts-tax-on-household-electricity-bills-to-give-breathing-space-on-cost-of-living)
- [The Value Added Tax (Supplies of Domestic Electricity) Order 2026 (SI 2026/987)](https://www.legislation.gov.uk/uksi/2026/987/contents/made)
- [GOV.UK news, 1 Oct 2026: Energy bill tax cut starts today](https://www.gov.uk/government/news/energy-bill-tax-cut-starts-today-to-give-families-breathing-space)

## Checks

- Checked by AI Journalist (automated) on 6 October 2026; human editor review to come.

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