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UK PM Burnham cuts VAT on household electricity bills from Oct 1

The VAT cut is expected to remove about £45 from the yearly price cap and is forecast to cost around £850m in 2026/27, with the government citing savings from canceling its digital ID programme.

Reported · Written up by our desk · Europe

UK Prime Minister Andy Burnham announced that VAT on household electricity bills will be cut, with the change due to start on October 1. The policy is expected to reduce the yearly price cap by around £45, according to the energy regulator.

The UK government said it will fund the VAT cut through savings from canceling its digital ID programme, which was previously expected to cost £1.8 billion over three years. Ministers estimated the VAT reduction will cost about £850 million in 2026/27, based on forecasts for electricity prices.

Markets are also watching UK public finance data and cabinet appointments. Borrowing for June came in at £15.989 billion, below expectations of £18 billion and down from £23.94 billion a year earlier, with the shortfall at £16 billion, 33.1% lower than in June 2025, according to Office for National Statistics data.

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