5% VAT to be removed from electricity bills from 1st October 2026

debitcardmayhem

"National Grid back into public ownership is also a strong possibility, squeezing revenue down to devalue the company to a more affordable level, and taking into account how much money they have taken off consumers in the past - compensation in the form of low yield govn bonds should do it."

Dreams are priceless , how do you affect the value of their overseas holdings, and how would you replace their commitments to Grid enhancements? Oh I know with more "low yield govn bonds", silly me , but who is going to buy said bonds?

SnowMan

https://www.moneysavingexpert.com/news/2026/07/electricity-bills-vat-cut-martin-lewis-analysis/

MSE article on this

t0rt0ise

Well that didn't tell us anything we didn't already know.

prowla

https://forums.moneysavingexpert.com/discussion/comment/82075982#Comment_82075982

Ofgem

Yes

You do know what the Standing Charge is don't you?

la531983

https://forums.moneysavingexpert.com/discussion/comment/82076639#Comment_82076639

I do, but why would Ofgem add 5% on because VAT is going? Your theory makes no sense.

QrizB

https://forums.moneysavingexpert.com/discussion/comment/82076151#Comment_82076151

Yes, all domestic energy fixed tariff contracts contain a term that says prices are quoted ex-VAT and changes to VAT rates will change the price charged.

Scot_39

As an all electric home - I see this largely compensating for the lower c6% rise in electric - in the July cap - following Iran spiking. (DF 13% spilt heavility to c25% on gas - more like 28% on gas unit rates).

But the good news - is that it will actually do some good this coming winter (rather than the having to wait for next like the budget £150)

And so even at the new profile class 2 cap TDCV - dropped to 3400 kWh on Jul 1st - and in my case last winter being about 63% of last years total bills on E10 heating - worth maybe only c£25 - maybe £30 at best.

I had hoped that July rates would drop back after MoU - but it didnt last - and so were now back at over 144p/therm - for gas since the latest 10+ days now of Iran conflict after the MoU price lull.

There is still about 4 weeks left of the current 3m averaging window (19t May to 18th Aug iirc) - but it would be a brave man who predicted what way the last couple of weeks of strikes in gulf are going to develop (or hopefully die away) and so how it may drive Oct / early winter SVT rates for the majority.

https://tradingeconomics.com/commodity/uk-natural-gas

Newdogowner36

I may be wrong but I thought VAT stands for value added tax which was originally for luxury goods, however as everyone needs Gas, Electric & Water to survive they are not luxury goods and the Government sneakily added VAT many years ago all these should be VAT exempt.

Swipe

At least electric only Utility Warehouse bills on fixed monthly DD will now be easier to sanity check. Mine got much simpler when I switched to variable DD.

MWT

https://forums.moneysavingexpert.com/discussion/comment/82076753#Comment_82076753

No, it was never only for luxury goods but at times in the past, much like the purchase tax it replaced, there have been different rates for different goods and services including a 'luxury rate' which no longer exists.