Electricity VAT hits 0% tomorrow — 5% stays in Northern Ireland

VAT on electricity used at home drops from 5% to 0% across Great Britain on 1 October 2026 — tomorrow — but in Northern Ireland it stays at 5%. The zero rate runs to 31 March 2027, and 5% returns on 1 April 2027.

What the cut is worth

Ofgem has already built the change into the price cap that starts tomorrow. For a typical household paying by direct debit the cap rises 4%, from £1,663 to £1,723 a year, covering 1 October to 31 December 2026. Without the VAT removal, Ofgem says, that figure would have been “around £45 higher”.

So both things are true at once: the tax has gone and the bill has gone up. The rise is gas, not electricity. Gas is up 8% and is still taxed at 5%. Electricity bills, Ofgem says, “remain broadly stable”, and a household with no gas supply sees an increase of less than 1%.

The Treasury put the cost of the cut at “around £850 million in 2026-27”, on its own estimate of electricity prices. HMRC’s costing note leaves the year-by-year table blank and says the final figure is “subject to scrutiny by the Office for Budget Responsibility”, so read £850 million as the government’s number rather than a checked one.

Northern Ireland stays at 5%

Fuel used at home	Great Britain, 1 Oct 2026 to 31 Mar 2027	Northern Ireland
Electricity	0%	5%
Gas	5%	5%
Any other fuel	5%	5%

HMRC’s wording leaves no room: “In Northern Ireland, qualifying supplies of electricity remain liable to VAT at the reduced rate of 5%.” The order behind the cut applies only to supplies made in Great Britain. Northern Ireland is outside it because EU VAT rates still apply there, and changing them would need EU agreement.

The Ofgem cap does not reach Northern Ireland either: domestic tariffs there are set by the Utility Regulator, whose system tracks fuel costs directly rather than through a capped unit rate. So neither half of tomorrow’s news lands there. What Northern Ireland gets instead is money — the government says the NI Executive “will receive comparable funding to enable it to support NI Households”. The announcement names no amount, no date and no scheme.

The bill that straddles the date

Where a billing period includes 1 October 2026, HMRC says suppliers “may determine the VAT liability of supplies based on the date the energy is consumed”, and recommends meter readings to work out the split. Other methods are allowed if they produce a “fair and reasonable outcome” — an estimate, in other words.

The sums are small. A £45 saving over a year is about £11 a quarter, so a fortnight landing on the wrong side of the line is a pound or two. But it is the one part of this a reader can check. A meter reading sent this week puts a measured figure where an estimate would otherwise go, and it is the same reading that settles whether the 8% gas rise starts on the right day.

What is not settled

The order that created the zero rate ends it on 31 March 2027. Nothing has been legislated beyond that date, and HMRC’s costing note says nothing about an extension. The Budget is on Wednesday 28 October 2026, and the Treasury has said the next decisions come “at the Budget alongside an OBR forecast” — so that is where an extension would have to appear. Until then, the planning assumption is 5% again from 1 April 2027, on bills covering the end of winter.

Where these figures come from

• Revenue and Customs Brief 10 (2026): Temporary zero rate of VAT for domestic electricity in Great Britain — HM Revenue and Customs
• Energy price cap will rise by 4% from October 2026 — Ofgem
• New PM cuts tax on household electricity bills to give breathing space on cost of living — GOV.UK
• The Value Added Tax (Supplies of Domestic Electricity) Order 2026 — legislation.gov.uk
• Price regulation — Utility Regulator (Northern Ireland)

Every figure traces to a dated document — the line this section is named after. If one here is wrong, tell us and it gets fixed publicly. Work out your own figures.