0% VAT on electricity from 1 October: check your bill

From 1 October 2026, VAT on domestic electricity drops from 5% to 0%. It was announced on 21 July and it is worth around £45 a year off a typical household's price cap bill.

Here is the part that decides whether you actually see it. The government said it expects "all suppliers to pass the VAT reduction on to all customers, including those on fixed tariffs". Expects. Nobody is checking your particular account. And that fixed-tariff line is in there for a reason: fixed-deal customers are the group most likely to assume nothing changes for them. It does not work that way. VAT is a tax bolted onto the bill, not part of the unit rate you fixed, so a fixed tariff is no shelter from it in either direction.

The mechanics: the cut is delivered by a Statutory Instrument laid when Parliament returns in September 2026. So the rate is not live yet, and it applies to electricity supplied from 1 October onwards.

Gas is not included

Only electricity changes. VAT on gas stays at 5%.

If you are on dual fuel, your October bill should show 0% on the electricity side and 5% on the gas side. A bill showing 0% on both is wrong. So is a bill showing 5% on both. Worth knowing before you fire off a complaint about the wrong half.

How to check your own bill

Two minutes, on the first bill covering usage from 1 October.

1. Find the VAT line. It sits in the detailed breakdown, not the summary page. In an app you will usually have to open the full PDF rather than trust the dashboard figure.
2. Match the rate to the fuel. Electricity should read 0%. Gas should still read 5%.
3. Check the period the charge covers. A bill straddling 30 September and 1 October should split: 5% on electricity used up to 30 September, 0% after. One flat 5% line across the whole period is the error to look for.
4. Do not judge it by the total. Ofgem confirms the next price cap by 26 August, covering 1 October to 31 December, and that can move your bill in either direction on its own. The VAT line is what to check, because it is the only part with a right answer.

If your electricity bill still shows 5%

Suppliers have been told to apply this. If yours has not, that is a billing error, and billing errors go through the normal complaint route.

1. Complain in writing, using the word "complaint". Give the bill date, quote the VAT line exactly as printed, and say what you want: the bill reissued at 0% VAT on electricity, with the difference credited to your account. Our energy bill complaint tool builds it.
2. Give them 8 weeks. That is the energy sector's window and it has not changed.
3. Escalate free to the Energy Ombudsman after 8 weeks, or immediately if they hand you a deadlock letter. It costs nothing, and a decision you accept binds them. Ofgem regulates suppliers but does not settle individual bills, and that misunderstanding costs people months. Not sure which scheme covers you? The ombudsman finder will tell you.

Supplier-specific escalation details are on our Octopus Energy, British Gas and E.ON complaint pages.

While you are in there, check the direct debit

A cap change is when direct debits get recalculated, and recalculation is when they get recalculated badly. Your supplier is guessing a year ahead. Guess high, and your money sits in their account instead of yours.

So check two things at once: whether the monthly amount matches what you actually use, and whether you are sitting on a credit balance you could have back. We wrote up how to claim back an energy credit balance, including the deadline Ofgem holds suppliers to.

One honest caveat

The Treasury has funded this for the current financial year, at a cost of around £850 million in 2026-27. It is not a permanent zero rate and nobody should budget as though it is.

Which is the argument for checking now rather than in March. The £45 is real, and it is yours. It just has to land on the bill first.

Bill still showing 5% on electricity after October? Start a complaint and we will draft the letter that gets it corrected.