Summary
- Qualifying domestic electricity supplied in England, Scotland and Wales will be subject to 0% VAT from 1 October 2026 to 31 March 2027. [gov.uk], [gov.uk]
- The measure covers electricity supplied for domestic use or for a charity’s non-business use. Northern Ireland remains subject to the existing reduced rate of 5%, and other fuel types are unaffected. [gov.uk], [gov.uk]
- For billing periods spanning 1 October, suppliers may allocate VAT according to the date of consumption. HMRC recommends meter readings, although another fair and reasonable method may be used. [gov.uk]
Extended article
HM Revenue & Customs has published Revenue and Customs Brief 10 (2026), explaining the temporary zero VAT rate for qualifying domestic electricity in Great Britain.
From 1 October 2026 through 31 March 2027, qualifying electricity supplies in England, Scotland and Wales will be taxed at 0%. The relief applies to supplies that would otherwise qualify for the reduced rate under the existing domestic fuel and power rules, including electricity for domestic use and a charity’s non-business use. [gov.uk], [gov.uk]
The change does not apply in Northern Ireland, where qualifying electricity remains subject to the 5% reduced rate. It is also limited to electricity. Other types of domestic fuel and power are not moved to the zero rate. [gov.uk], [gov.uk]
HMRC provides specific guidance for billing periods that include the commencement date. Suppliers may determine the applicable VAT rate based on when the electricity was consumed. HMRC recommends using meter readings to allocate consumption between the 5% and 0% periods. Another method may be used if it produces a fair and reasonable result. [gov.uk]
Suppliers must keep clear records of when the different rates are applied and process any resulting corrections in accordance with normal VAT accounting rules. [gov.uk]
External links
Other Newsletters
- HMRC has changed its policy on VAT refunds for non-UK businesses that are members of a UK VAT group.
- The new approach allows these businesses to recover VAT through the VAT group framework, rather than being blocked by their non-UK establishment status.
- The change affects input VAT recovery for grouped businesses and is relevant to cross-border VAT planning and compliance.
Source: icaew.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
