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Burnham government cuts VAT on home electricity bills starting Oct. 1

The VAT rate will fall from 5% to zero from 1 October, which the government says will cut a typical household bill by about £45 a year.

Reported · Written up by our desk · Trade & Tariffs

In one of his first moves as Prime Minister, Andy Burnham announced that VAT will be cut on household electricity bills as part of his cost of living pledge.

The government will reduce VAT on domestic electricity from 5% to zero effective 1 October, with the change expected to save a typical household about £45 a year, and larger households likely to see bigger savings as they use more electricity.

Burnham also said he will look at the tax free personal allowance ahead of his first Budget in the autumn, as he seeks to give people more financial “breathing space.”

The BBC reports that past changes to energy bills have faced quick reversals, after levies were shifted in April and bills later rose again, with the outlet attributing part of the increase to wider shocks linked to the US Israeli strikes on Iran.

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