Andy Burnham, the new prime minister, has announced a six-month suspension of VAT on household electricity bills in Great Britain, effective from 1 October 2026, as his first cost-of-living measure. The move is designed to ease pressure on households through the winter, when energy costs typically peak, though its benefits vary widely depending on how much electricity a household uses and whether they rely on gas or electricity for heating.

Households normally pay 5% VAT on electricity, calculated on both the standing charge and units used; removing this is expected to cut the annual price cap by roughly £45 for a typical household, though actual savings depend on usage. Those on fixed-rate tariffs will also benefit, as VAT is still applied to their bills. Northern Ireland is excluded due to post-Brexit rules tying it to EU VAT rates, though Stormont will receive separate funding for cost-of-living support. Critics, including the IFS and National Energy Action, note the policy favours high electricity users and green-technology adopters over the many low-income households that heat with gas, since gas prices have risen far more sharply since the Iran war.