From 1 October, VAT will be abolished on household electricity bills, resulting in savings of approximately £45 per year for the average consumer. This measure accompanies Ofgem’s decision to raise the energy price cap by £60, setting it at £1,723 annually.
The tax reduction was introduced under the leadership of Labour Party Prime Minister Andy Burnham. Discussions are underway to potentially extend the VAT exemption to gas bills in the forthcoming Budget, which could offer households an additional £40 in savings.
David Martell, CEO of Andersen EV, a home charger company, commented: “For the average electric vehicle (EV) driver charging at home, this change equates to savings of around £20–£25 annually, with higher-mileage drivers potentially saving up to £35–£40. While this may seem modest, it marks a positive step towards supporting the transition to electric vehicles with practical benefits for consumers.”
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Siobhan Doyle, consumer writer at Carwow, described the VAT cut on household electricity as “a welcome boost for drivers relying on home charging.”
Prime Minister Andy Burnham, MP for Makerfield and recent successor to Sir Keir Starmer, stated: “Westminster has failed to work for people for too long, with many families struggling with the cost of living. That must change. On my second day as Prime Minister, I am taking immediate action to reduce taxes on energy bills, putting more money back into people’s pockets and restoring hope.”
Chancellor of the Exchequer John Healey MP added: “Too many people have been burdened by the cost of living for far too long. Today’s energy tax cut will provide families with some relief on their bills and offer reassurance this winter. This measure is financed this year by cancelling the Digital ID programme and aims to reduce inflation while supporting households across all regions.”