Your gas bill rises 8% on 1 October. Your electricity bill does not.

Two things happen to household energy on 1 October 2026 and they pull against each other. Ofgem’s price cap goes up 4%. On the same day, value added tax (VAT) on household electricity drops from 5% to zero. Ofgem says gas bills rise 8%, while a household with no gas supply sees an increase of under 1% — the tax cut absorbs almost all of the rise on the electricity side. So the fork in front of you is not really “cap or fix” — it is how much of your winter is heated by gas, and whether you want to lock a rate against it.

What changes on 1 October

Ofgem announced the new cap on 26 August 2026. For a typical household paying by direct debit for both fuels it goes from £1,663 to £1,723 a year — £60 more, or £5 a month. Ofgem’s explanation is short: “High international gas prices are continuing to drive energy costs in the UK.”

The cap covers England, Scotland and Wales. Northern Ireland has its own regulator and is not in any of these figures.

The rates underneath move like this:

Rate (direct debit)	1 July to 30 September	1 October to 31 December
Electricity unit rate	26.11p per kWh	26.32p per kWh
Electricity standing charge	57.19p a day	54.83p a day
Gas unit rate	7.33p per kWh	7.97p per kWh
Gas standing charge	29.04p a day	29.68p a day

Read those two columns carefully, because they are not on the same basis. The July electricity figures include 5% VAT. The October ones include none. Ofgem says so itself: “Costs cannot be compared directly to previous periods because of this change.”

On the bill, gas units are up 8.7% and electricity units are up 0.8%. On the price before tax, electricity moved a great deal more than that. Strip the 5% out of 26.11p and the July electricity price was 24.87p, against 26.32p now. The electricity price rose. The tax came off. The bill barely moved.

Standing charges are the part people skip, because you pay them whether you use anything or not. On the new rates a dual-fuel home pays £308.46 a year before it burns a single unit — £200.13 for electricity and £108.33 for gas. That is £6.28 less than the quarter now ending. Again, that is the tax and not a cut: before VAT the July electricity standing charge was 54.47p a day, against 54.83p now. It went up.

The cap is not a cap on your bill

Two warnings sit behind the headline.

First, the cap limits unit rates and standing charges, not the total. A cold quarter can push your bill up even when the cap comes down.

Second, £1,723 is not comparable with cap figures you may remember from last year, for two separate reasons. Ofgem changed its assumption about how much a typical household uses in July 2026, after finding homes were using around 7% less electricity and 17% less gas than at the previous review. And from October the electricity half is measured without VAT in it.

The VAT cut reaches further than the cap, and ends sooner

The government announced on 26 August 2026 that VAT on household electricity goes to zero from 1 October 2026 until 31 March 2027, worth an average of £45 a year. Gas is not included. Neither is Northern Ireland: HMRC applies the zero rate in Great Britain only, and qualifying electricity supplies in Northern Ireland stay at 5%.

It reaches people the cap does not. Fixed tariffs already locked in get it. Prepayment meters get it — from 1 October, VAT is no longer added when you top up. The government says the cut is funded for the 2026 to 2027 financial year. It has not said what happens after 31 March 2027, beyond that it will “keep looking at what more we can do”.

Costing the branches

Stay on the cap. A typical dual-fuel direct debit household pays £1,723 a year on Ofgem’s usage assumption, £60 more than now, with the VAT cut already inside that figure. If you heat with gas and use more than typical, your increase is larger than 4%.

Fix now. A fix holds the unit rate and the standing charge for its term, so the next cap change passes you by in either direction. You still get the VAT cut. But a fix running past 31 March 2027 will see 5% VAT return on the electricity half unless the zero rate is extended, and a price quoted today is quoted against a cap that already contains a temporary tax cut.

Compare properly. Ofgem says around 35% of households — about 11 million — are already on a fix and unaffected by the cap rise. Setting a fixed offer against £1,723 only works if you use the same usage assumption and count both standing charges.

What the answer turns on

Three facts decide it, and one of them cannot be known yet.

Your gas share. Gas units rose 8.7% and electricity units 0.8%. A gas-heated house and an all-electric flat are having different Octobers.

Your actual usage, not Ofgem’s typical household. The cap sets rates. Your bill is those rates times what you use, plus 365 days of standing charge.

And whether the zero rate survives 31 March 2027. The government has funded it to that date and said nothing about what follows, so any fix running into next spring is priced against a tax rate that may not be there.

All of this lands on prices that were already climbing. CPI was 3.1% in the year to August 2026, with electricity, gas and other fuels up 6.0% over the same year.

If you are working out what you have to meet the bill with, our NHS take-home calculator is at /nhs/pay-calculator and the current council pay award is at /njc/pay-award.

Where these figures come from

• Energy price cap will rise by 4% from October 2026 — Ofgem
• Energy price cap unit rates and standing charges — Ofgem
• Breathing space on your energy bill — GOV.UK
• Consumer price inflation, UK: August 2026 — Office for National Statistics

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.