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Part of the special edition: Autumn Budget 2026: what it means for you

What's changingHousehold bills

Budget 2026 and your energy bills: the £100 payment, 0% VAT on electricity and the end of gas standing charges

Households in council tax bands A to D in England are due a £100 Household Energy Payment from January 2027. VAT on home electricity stays at 0% until the end of June 2027.

Published 28 October 2026Last checked 28 October 2026UK-wideFrom HM Treasury

A kitchen radiator with a folded wool blanket on top and a small envelope tucked behind a kettle plug, morning light on frosted window glass.

Illustration generated with AI

What's happening

The Budget adds three things to energy help. First, a £100 Household Energy Payment for homes in council tax bands A to D in England from January 2027, reaching up to 20 million households. Second, the 0% rate of VAT on home electricity in Great Britain is extended until 30 June 2027, which the Treasury expects to take about £50 off the Ofgem price cap in April 2027. Third, the government has asked Ofgem to scrap gas standing charges, aiming for the end of 2027, with the costs moved into the price per unit of gas. Scotland, Wales and Northern Ireland get funding to offer similar help.

The question: What does the Budget do for my energy bills this winter?

This applies to you if…

  • Your home is in England and in council tax band A, B, C or D (for the £100 payment)
  • You pay for electricity at home in Great Britain (for 0% VAT), or in Northern Ireland from April 2027
  • You pay a gas standing charge (for the planned reform)

Not for you if…

  • Homes in council tax bands E to H, although councils in England get £100 million for extra targeted help, some of which can go to these homes
  • Homes in Scotland, Wales and Northern Ireland for the £100 payment itself, where the devolved governments decide how to use their share
  • Gas bills for the VAT cut, which applies only to electricity

What it's worth

What it's worth: £100 for eligible homes in England, plus about £50 a year off a typical electricity bill from the VAT cut

£100 Household Energy Payment for council tax bands A to D in England from January 2027 (Budget 2026, 4.3). VAT cut expected to take around £50 off the annual Ofgem price cap in April 2027 (Budget 2026, 4.3).

Tax year Winter 2026 to 2027 and the April to June 2027 price cap

Illustrative calc: what the 5% VAT would have added

  1. Home electricity is normally charged VAT at the reduced rate of 5%.
  2. On £500 of electricity before VAT, 5% VAT is £25.
  3. At 0% VAT the same electricity costs £500, so £25 is saved.
  4. On £1,000 of electricity before VAT, the saving is £50.

5p saved for every £1 of electricity before VAT

Illustrative calc. Your saving depends on how much electricity you use. The Treasury's own estimate is about £50 off the annual price cap in April 2027.

How to do it

  1. 1

    Check your council tax band

    Your band is on your council tax bill. You can also look it up on GOV.UK.

    Takes about 5 minutes

  2. 2

    Watch for how the £100 will be paid

    The Budget document describes the payment as delivered through the council tax system, and also as paid directly into bank accounts. The government has not yet published the full details. Be wary of anyone who contacts you asking for bank details to 'claim' it.

    Takes about Ongoing

  3. 3

    If you are struggling with energy debt, get help now

    The Budget promises a new energy debt strategy, including a one-off debt relief scheme for eligible households, but its start date is not set. Talking to your supplier early about a payment plan can stop debt building up.

    Takes about 20 minutes

Deadline

0% VAT on home electricity ends — 30 June 2027 (in 245 days)

VAT on home electricity is due to go back to 5% after 30 June 2027 unless extended again.

The catches

England only for the £100

The payment is for bands A to D in England. Scotland, Wales and Northern Ireland get their share of the money through the Barnett formula and decide how to use it.

Gas standing charges move, not vanish

Ofgem will make suppliers recover the costs through the price per unit of gas instead. People who use a lot of gas could pay more. The Budget says the government will set out targeted mitigation.

The VAT cut is temporary

The 0% rate started on 1 October 2026 and is extended to 30 June 2027. After that it is due to return to 5%.

Electricity standing charges

The government says it will reform electricity standing charges and set out details next year. Nothing changes yet.

Energy-saving materials

VAT on energy-saving materials such as insulation goes back to 5% from 1 April 2027. Heat batteries are added to the relief.

Illustrative example

A family in a band C home in England

Ade and Mo rent a band C house in Leeds and use gas central heating. They pay a gas standing charge close to the Treasury's average of £108 a year.

  1. From January 2027 their household is due the £100 Household Energy Payment.
  2. Their electricity is charged VAT at 0% until 30 June 2027.
  3. If gas standing charges are abolished as planned by the end of 2027, the £108 a year moves into the price of each unit of gas. Whether they pay more or less depends on how much gas they use.

£100 this winter, lower electricity VAT until July 2027, and a change to how gas is charged later

Illustrative example. The household is made up. The standing charge figure is the Budget's national average.

Common misreadings

You might hear: The Warm Home Discount is going up by £100.

Actually: Reports before the Budget suggested this. The Budget instead creates a separate £100 Household Energy Payment for council tax bands A to D in England.

You might hear: Everyone in the UK gets £100.

Actually: The £100 is for bands A to D in England. The devolved governments get funding to offer similar support.

You might hear: Gas standing charges disappear from bills next month.

Actually: The government has asked Ofgem to abolish them, aiming for the end of 2027 or as soon as possible after.

Where the UK nations differ

England
£100 Household Energy Payment for bands A to D from January 2027, plus £100 million for councils to give extra targeted help.
Scotland and Wales
0% VAT on electricity applies. The devolved governments receive Barnett funding to provide similar support to the £100 payment.
Northern Ireland
Funding for the Executive to give comparable help with electricity bills. Extended VAT relief is expected to apply from April 2027. The tariff suspension on kerosene heating oil also helps homes that use oil.

What you could do

  1. live in England in a band A to D home

    Look out for official details of the £100 payment, and never give bank details to unexpected callers.

  2. live in a band E to H home and are struggling with bills

    Ask your local council about help from the extra £100 million for targeted support in England.

  3. are behind on energy bills

    Contact your supplier about an affordable payment plan, and check the new energy debt strategy for the relief scheme.

Timeline

  1. 1 October 2026

    0% VAT on home electricity began

    Introduced for this winter in Great Britain.

  2. 1 January 2027

    £100 Household Energy Payment

    Due from January 2027 for bands A to D in England.

  3. 1 April 2027

    Price cap change and VAT on energy-saving materials

    The VAT cut is expected to take about £50 off the April cap. Energy-saving materials go back to 5% VAT. Extended VAT relief expected in Northern Ireland.

  4. 30 June 2027

    0% VAT on electricity ends

    Last day of the extended zero rate.

  5. 31 December 2027

    Gas standing charges target

    The government is aiming for abolition by the end of 2027 or as soon as possible after.

  6. 31 December 2028

    Heating oil tariff suspension ends

    Kerosene tariffs suspended until December 2028.

The detail

The rules

  • Household Energy Payment: £100 for households in council tax bands A to D in England from January 2027. Up to 20 million households. Cost £2.6 billion (Budget 2026, 4.3 and Box 3.A).
  • The Treasury estimates it reaches 83% of fuel-stressed households in England and 88% of households in the bottom three income deciles.
  • £100 million for local authorities in England for targeted support, including some homes above band D.
  • 0% VAT on qualifying domestic electricity extended until 30 June 2027 (OOTLAR 2.20). Expected to take around £50 off the annual Ofgem price cap in April 2027.
  • Gas standing charges are £108 a year on average for the typical billpayer. Ofgem asked to abolish them, recovering costs through unit rates.
  • Energy debt strategy expected to save a typical household almost £30 by 2030, including a one-off targeted debt relief scheme.
  • Planned Gas Shipper Obligation scrapped, so government rather than billpayers funds hydrogen project costs.
  • Bank Corporation Tax Surcharge rises from 3% to 6% from 1 January 2027 to 31 March 2028 to help fund the payment.

References

  • Budget 2026, 4.3: VAT extension, Household Energy Payment, local authority funding, energy debt and standing charges.
  • Budget 2026, Box 3.A: Summary of energy bill support and the Cost Control Framework.
  • OOTLAR 2.20 and 2.22: VAT zero rate to 30 June 2027; energy-saving materials back to 5% from 1 April 2027.

Documents

Words explained

Standing charge
A fixed daily amount you pay for your energy supply, however much you use.
Unit rate
The price you pay for each unit (kilowatt hour) of energy you use.
Price cap
The most suppliers can charge per unit and per day on standard tariffs, set by Ofgem every three months.
Barnett formula
The way extra UK government spending in England is matched with funding for Scotland, Wales and Northern Ireland.

In short

If you live in England in a band A to D home, a £100 payment is due from January 2027. Electricity stays VAT-free until the end of June 2027 across Great Britain. Gas standing charges are set to go by the end of 2027, with the cost moved into unit prices.

Related dates

  • 29 Oct Ofgem Market Stabilisation Charge consultation closesDeadline · tomorrow
  • 25 Nov Ofgem announces the January to March 2027 price capAnnouncement · in 28 days
  • 1 Jan New energy price cap takes effectChange · in 65 days
  • 1 Jan £100 Household Energy Payment beginsChange · in 65 days
  • 23 Feb Ofgem announces the April to June 2027 price capAnnouncement · in 118 days
  • 26 Feb Warm Home Discount helpline deadlineDeadline · in 121 days
See the money calendar

Sources

  1. Budget 2026 (HTML), HM Treasury (2026-10-28)
  2. Budget 2026: Overview of tax legislation and rates (OOTLAR), HMRC (2026-10-28)
  3. Impact on households: distributional analysis to accompany Budget 2026, HM Treasury (2026-10-28)
  4. Energy debt circuit breaker: a strategy for domestic energy debt, UK government (2026-10-28)
  5. Council Tax bands, GOV.UK

This is guidance, not regulated financial advice. Check figures against the linked official source before you act. Written with AI assistance and checked against primary sources. How Kitty works. For free, impartial help, try MoneyHelper or Citizens Advice.