VAT to be cut from household electricity bills in October
Summary
The UK government will reduce the VAT (value-added tax) on household electricity bills from 5% starting October 1. This change will save the average household about £45 a year and will be paid for by canceling a planned digital ID program.Key Facts
- VAT on household electricity bills will drop from 5% to 0% on October 1.
- A typical household will save around £45 per year due to this change.
- The cost of this tax cut is estimated at £850 million for the current financial year.
- The government will fund this by canceling the digital ID program, which would have cost £1.8 billion over three years.
- Andy Burnham recently became the UK prime minister, the seventh since 2016.
- John Healey was appointed chancellor and said the VAT cut would help reassure people during the winter.
- Healey replaced Rachel Reeves following Labour’s win in the 2024 election.
- Burnham’s new cabinet was set to meet for the first time shortly after these announcements.
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