UK VAT will be cut from household electricity bills from 1 October, reducing the rate from 5% to zero and saving households about £45 a year. The cut is funded by savings from scrapping the digital ID programme and will apply to England, Scotland and Wales, with equivalent funding for Northern Ireland.
The VATfaqs digest
Global VAT news, delivered Tuesday and Thursday. Free, curated from 50+ official sources, no spam.
No spam · Unsubscribe any time
The Independent · 29 minutes ago
In the UK, the government announced an £850 million tax cut on energy bills, making electricity bills VAT free from 1 October 2026 in England, Scotland and Wales. Northern Ireland remains exempt because EU VAT rates apply under the Windsor Framework, preventing the cut from applying there.
The Independent · about 5 hours ago
UK households will see 5% VAT removed from electricity bills from 1 October 2026, a move announced by Prime Minister Andy Burnham. The change is expected to save about £45 on a typical annual bill, though a projected 3.1% rise in the price cap may offset the benefit.
Yahoo News Canada · about 9 hours ago
The United Kingdom will see VAT on household electricity removed from 5% to 0% on 1 October, saving typical homes around £45 a year.
Law360 · about 9 hours ago
UK court rules that Staffing Co cannot recover input VAT because its director knew or should have known its supply chain was compromised by fraud. The decision underscores the importance of due diligence in supply chain management for VAT recovery.
UK HMRC · 1 day ago
UK HMRC provides guidance on how VAT claims are calculated and applied to insolvent businesses, including details on relevant dates, amended claims, and penalty interest. The handbook outlines procedures for proof of debt, statutory interest, and the impact of recent changes such as the cessation of tax clearance in MVL cases from 6 December 2023.
Saffery · 3 days ago
The UK’s HMRC announced several VAT developments in July 2026, including changes to the Capital Goods Scheme, digitisation of option to tax, a consultation on development land for social housing, and the adoption of Peppol for e-invoicing. From 29 July 2026, the CGS threshold for land, buildings and civil engineering works rises to £600,000 and computers are removed from the scheme, while a new online portal for option to tax will launch before year end.
Key Takeaways
From 1 October 2026, the UK VAT rate on household electricity is reduced from 5% to 0%.
From 1 October 2026, the VAT cut applies to England, Scotland and Wales, with equivalent funding provided for Northern Ireland.
From 1 March 2027, the VAT cut is funded until the end of the financial year; any continuation beyond that must be announced in the next Budget.
From 1 October 2026, small businesses qualifying for domestic energy VAT relief, charities and residential care homes eligible for the reduced rate will also benefit.
From 1 October 2026, the VAT cut is funded by savings from scrapping the digital ID programme, which was projected to cost £1.8bn over three years.
Primary source
Read the full article at BBCThis summary was published on VATfaqs.com on 21 July 2026. It relates to VAT developments in United Kingdom. The original source is BBC.
