Electricity: VAT
The question
To ask the Secretary of State for Energy Security and Net Zero, what comparative assessment she has made of value for money of (a) removing VAT from electricity bills and (b) targeted support for households in fuel poverty.
Answered by Department for Energy Security and Net Zero
The Government is tackling rising bills with a tax cut to remove VAT from domestic electricity bills from October 1 in time to impact the next Ofgem price cap. Cutting VAT on electricity bills is expected to take around £45 off the yearly Ofgem price cap in October. This is on top of the £150 removed from costs on bills at the last Budget. The change supports the poorest households, who spend a higher percentage of their income on energy bills. It will also provide more help to households with electric heating who are more likely to be on lower incomes.
The Government is also taking targeted action to support households in fuel poverty. The 2026 Fuel Poverty Strategy for England sets out a plan to reduce energy costs for low-income households and lift up to one million households out of fuel poverty by 2030. This includes support through the Warm Homes Plan and the expanded Warm Home Discount, which is providing £150 off energy bills for nearly 6 million households this winter and for the rest of the decade.
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