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UK to scrap VAT on electricity bills starting October 1

The VAT removal is expected to cut the upcoming Ofgem price cap by about $60, funded via cancellation of the $2.4 billion Digital ID program.

Reported · Written up by our desk · Energy

OilPrice reports that UK Prime Minister Andy Burnham said the Labour government will scrap the 5% value added tax (VAT) charged on domestic electricity bills to help households manage rising energy costs.

The policy is set to take effect from October 1, timed to influence the next Ofgem price cap, with the government saying the measure is funded for the current financial year.

According to the outlet, the government will pay for the VAT cut by canceling the $2.4 billion, or 1.8 billion pounds, Digital ID program.

OilPrice adds that the VAT removal is expected to reduce the yearly Ofgem price cap by about $60, or 45 pounds, and the government expects suppliers to pass the change through to all customers, including those on fixed tariffs.

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