UK proposes extending the temporary 0% VAT rate on domestic electricity to 30 June 2027 (Budget 2026)
This change is proposed and is not law. The rules below describe what would change if it is adopted.
This page records one dated change. For the rules in United Kingdom as they stand today, see the United Kingdom guide →
- Jurisdiction
- United Kingdom
- Tax
- VAT
- Change type
- Rate change
- Status
- Proposed
- Impact
- Plan ahead
- Announced
- 28 October 2026
- Effective
- 1 April 2027
- Authority
- HM Treasury / HMRC
- Systems
- Tax engine, Invoicing
- Verified
- Fetched from official source · high confidence
Electricity suppliers making qualifying domestic supplies in Great Britain that would otherwise carry the 5% reduced rate, and the households they bill.
Electricity suppliers in Great Britain: plan to keep applying 0% to qualifying domestic supplies to 30 June 2027, subject to the extending order.
Tax engineInvoicing
At Budget 2026 (28 October 2026) the UK government announced that the temporary 0% VAT rate on qualifying domestic electricity supplies, currently due to end on 31 March 2027, will be extended until 30 June 2027. Secondary legislation is to be laid in early 2027.
What changed in detail
This is an announcement, not yet law. In the Budget 2026 Overview of Tax Legislation and Rates (OOTLAR), published on 28 October 2026, the UK government said it will extend the temporary VAT zero rate for domestic electricity supplies until 30 June 2027.
Under the announcement, a 0% rate would continue to apply from 1 April 2027 to qualifying electricity supplies that would otherwise be subject to the 5% reduced rate. The extension needs secondary legislation, which the government says it will lay before Parliament in early 2027. Until that order is made, the existing temporary zero rate keeps its current end date.
What it means
Suppliers in Great Britain should not plan a billing switch back to 5% on 1 April 2027. The working assumption is three more months at 0%, to 30 June 2027, but it is conditional on an order that has not been laid. Keep the rate change configurable rather than hard-coded, and watch for the statutory instrument in early 2027: if it slips or changes, the 1 April date is the one that bites.
Proof
As announced at Budget 2026, the government will extend the temporary VAT zero rate for domestic electricity supplies until 30 June 2027. A 0% rate of VAT will continue to apply to qualifying electricity supplies that would otherwise be subject to the reduced rate of 5% from 1 April 2027. The government will lay secondary legislation before Parliament in early 2027 to extend this temporary zero rate of VAT.
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