Electricity VAT Drops to Zero on 1 October — and EV Charging Still Gets Slightly Dearer
From 1 October 2026, VAT on domestic electricity in Great Britain falls from 5% to zero. It is a genuine tax cut, it runs until 31 March 2027, and it will not make charging an electric car cheaper. It will stop it getting 5.84% more expensive.
That is the whole story, and it is worth understanding because the headline and the bill point in opposite directions.
What actually changes on 1 October
Two things move at once, which is why the effect is not the one people expect.
| 1 Jul to 30 Sept 2026 | From 1 Oct 2026 | |
|---|---|---|
| VAT on domestic electricity | 5% | 0% |
| Price before VAT | 24.87p per kWh | 26.32p per kWh |
| What you actually pay | 26.11p per kWh | 26.32p per kWh |
| Standing charge | 57.19p a day | 54.83p a day |
The pre-tax price of electricity rises 5.84%. The VAT cut absorbs almost all of that. What lands on your bill is a rise of 0.80% per unit.
So the tax cut is real and it is worth having — without it the unit rate would have gone up by nearly six per cent. But nobody's charging bill falls because of it, and anyone budgeting on the assumption that it will is going to be wrong in the right direction only by luck.
What it does per mile
On the usual assumption of 3.5 miles per kWh, charging at home on the capped rate:
- July to September 2026: 7.46p a mile
- From 1 October: 7.52p a mile
Over 8,000 miles a year that is a difference of about £4.80 — small enough that the standing charge matters more. That is falling by 2.36p a day, which is roughly £8.61 a year back, so a household using less than about 4,102 kWh a year in total comes out marginally ahead while paying slightly more per unit, and one using more than that pays slightly more overall.
Charging an electric car at home moves a household past that line quickly. 8,000 miles of charging is about 2,286 kWh on its own, which leaves only about 1,816 kWh a year for everything else in the house before the higher unit rate outweighs the standing-charge saving.
The detail that catches people out
The zero rate applies to supplies made between 1 October 2026 and 31 March 2027. That is a supply-date test, not a bill-date test. A bill that arrives in October covering September usage is charged at the old rate on the September part, because the electricity was supplied before the window opened. The same happens in reverse at the end of March.
It is also Great Britain only. Northern Ireland keeps the 5% reduced rate throughout: its domestic electricity is regulated by the Utility Regulator rather than by Ofgem’s cap, and the zero rate does not extend to it.
What happens on 1 April 2027
Nothing has been published. The Order that makes the zero rate carries no provision for what follows it, and HMRC has not said. The standing 5% reduced rate is what a lapsed time-limited zero rate would normally fall back to, so that is the reasonable planning assumption — but it is an assumption, not an announcement, and anyone telling you it is settled is guessing.
If you are working out whether an electric car makes sense on running costs, the thing that moves the answer is not this. It is whether you can charge at home at all: on the public rapid network the cost per mile is several times the home rate, and from April 2028 a new mileage charge applies to electric cars on top of vehicle tax.
Frequently Asked Questions
Will the zero VAT rate make charging an electric car cheaper?
No. The pre-tax price of electricity rises 5.84% on the same day the VAT cut lands, so the two almost cancel out. What reaches the bill is a rise of 0.80% per unit, from 26.11p to 26.32p per kWh. The cut is real and worth having — without it the unit rate would have risen by nearly six per cent — but no one’s charging cost falls because of it.
Does the zero VAT rate on electricity apply in Northern Ireland?
No. The zero rate covers Great Britain only, and Northern Ireland keeps the standing 5% reduced rate throughout the window. Northern Ireland’s domestic electricity is regulated by the Utility Regulator rather than by Ofgem’s price cap, so neither the cap figures nor the VAT change described here apply to a Northern Ireland bill.
If my bill arrives in October, is all of it zero-rated?
Not necessarily. The Value Added Tax (Supplies of Domestic Electricity) Order 2026 (SI 2026/987) applies to supplies made inside the window, which is a supply-date test rather than a bill-date test. A bill issued in October covering September usage is charged at the old 5% rate on the September part, because that electricity was supplied before the window opened. The same happens in reverse at the end of March.
What happens to electricity VAT after 31 March 2027?
It is expected to return to the standing reduced rate of 5% unless the window is extended — HMRC has not published the position after 31 March 2027. Five per cent is the reasonable planning assumption, because that is the standing reduced rate a lapsed time-limited zero rate falls back to — but it is an assumption, not an announcement.
Where these figures come from
The cap figures are Ofgem's own, for Great Britain, Direct Debit, and they include VAT at the rate stated for each period. The zero rate is made by The Value Added Tax (Supplies of Domestic Electricity) Order 2026, article 1(2). The figures were correct as of 20 September 2026, when this was written, and were checked against Ofgem on 9 September 2026. They compare the July–September and October–December 2026 caps, and later caps will differ.
Your own tariff may differ from the cap — the cap limits what a supplier may charge per unit and per day, it is not a fixed price, and a fixed or off-peak tariff can sit well below it. Check your own bill before relying on any of these numbers for your own car.
