Burnham Scraps 5% VAT on GB Electricity for 6 Months, Saving Typical Homes £45
Updated
Updated · The Guardian · Jul 21
Burnham Scraps 5% VAT on GB Electricity for 6 Months, Saving Typical Homes £45
3 articles · Updated · The Guardian · Jul 21
Summary
From 1 October, households in England, Scotland and Wales will pay no VAT on electricity for six months, a winter measure the government says cuts the annual Ofgem price cap by about £45 for a typical home.
5% VAT is normally added after standing charges and usage, so savings will vary by consumption; bills may still rise overall in October if Ofgem’s cap increases for customers not on fixed tariffs.
Northern Ireland is excluded because post-Brexit rules keep EU VAT rates in place there, though Stormont will receive funding for separate cost-of-living support.
24% gas-price gains since the Iran war versus 5% for electricity have drawn criticism that the policy is poorly targeted, while charities say it does little for record £5.5 billion energy debt and most businesses get no relief.