Autumn Budget 2026: what it means for your energy bills

Published 28 October 2026. The Chancellor, John Healey, announced three changes to household energy bills in today’s Budget: a one-off £100 payment this winter, a longer break from VAT on electricity, and a plan to scrap the standing charge on gas. There was no new help aimed at business energy bills. Here is what each change means, who gets it and when.

The short version

• £100 Household Energy Payment: paid this winter to about 20 million homes in council tax bands A to D, straight into your bank account. You do not need to apply or give anyone your bank details.
• No VAT on home electricity until the end of June 2027: the VAT break in England, Scotland and Wales that started in October was due to end on 31 March and now runs three months longer. The government puts the saving at about £50 off the yearly price cap for a typical home.
• Gas standing charges to go: the Chancellor will ask Ofgem to remove them in 2027. The cost moves into the price per unit of gas, so low gas users gain and high gas users may pay more.
• Businesses: none of these three changes applies to business energy contracts. The main business change is wider business rates relief for smaller shops, hospitality and leisure.

The £100 winter payment

The new Household Energy Payment is a one-off £100 for homes in council tax bands A to D in England, about 20 million households. It costs £2.6 billion. It is paid through the council tax system into your bank account, not through your energy supplier, so it does not depend on who supplies you or how you pay. The exact payment date has not been confirmed yet, only “this winter”.

The Scottish, Welsh and Northern Ireland governments will get their share of the money, and it is up to them how they pass it on.

Watch out for scams. The payment needs no application and no bank details. Anyone who calls, texts or emails asking for your details “to release your £100” is not from the government or your council.

Not everyone who is struggling will get it. The Resolution Foundation estimates that about one in eight lower-income households live in band E or above and will miss out.

Electricity VAT: extended to the end of June 2027

Since 1 October 2026 there has been no VAT on home electricity bills in England, Scotland and Wales, which saves a typical household around £3.60 to £4 a month. That relief was due to end on 31 March 2027. The Budget extends it to the end of June 2027, three months longer. The government estimates this takes about £50 off the annual price cap for a typical home over the period. HMRC’s guidance will be updated with the new date.

In Northern Ireland, home electricity is still charged VAT at 5%. VAT on home gas stays at 5% everywhere. You do not need to do anything: suppliers apply the VAT change to your bills automatically, whether you are on a fixed or a variable tariff.

Scrapping the gas standing charge: who wins and who pays more

A standing charge is the fixed daily amount you pay before you use any energy. Under the current price cap the average gas standing charge is about 30p a day, roughly £108 to £109 a year. The Chancellor called it “unfair and outdated” and will ask Ofgem to remove it in 2027. It does not change your bill today.

The money does not disappear. Suppliers are expected to recover it through a higher price per kWh of gas instead. Our rough estimate, if the whole charge moves into unit rates, is around 1p more per kWh:

• Low gas users (small flats, well-insulated homes, people who are out all day) should pay less overall. Prepayment customers who use little gas in summer would no longer build up standing-charge debt.
• Typical users would see little change overall.
• High gas users (larger or older homes, people at home all day) could pay more, because the extra unit cost on every kWh outweighs the charge they no longer pay.

Ofgem will set the detail, so treat these figures as a guide. The Chancellor also suggested a similar change for electricity standing charges (about 55p a day on average), but gave no date.

What it means for the price cap

The price cap for 1 October to 31 December 2026 is £1,723 a year for a typical dual-fuel home on Direct Debit. Ofgem announces the January to March 2027 level on 25 November. Forecasters expect rises in January and April 2027. The VAT extension softens the electricity side of that from April to June, but it does not stop the cap moving.

If you are on a standard variable tariff, your bill follows the cap. A fixed tariff holds your unit rates and standing charges for the length of the deal, and the VAT relief still applies to fixed electricity tariffs.

Business energy: what changes and what doesn’t

None of the energy measures above applies to business energy:

• The £100 payment is for households only.
• The VAT break covers domestic electricity. Business electricity is still charged VAT at the normal business rate.
• The standing-charge change is for household tariffs regulated by Ofgem’s price cap. Business contracts are not capped, and your standing charge is whatever your contract says.

The main business change in the Budget is to business rates. The small business rates relief threshold for retail, hospitality and leisure rises from £12,000 to £18,000 of rateable value, which the Chancellor said means half of shops, restaurants and gyms will pay no business rates. That is not an energy measure, but it frees up money that many small firms spend on energy.

Small-business groups said energy costs remain one of their biggest pressures, alongside wages and rent. If your business contract ends in the next few months, it is worth comparing before it rolls onto out-of-contract rates, which are usually much higher.

What you can do now

• Check your council tax band on your council tax bill or on GOV.UK to see whether you get the £100. You do not need to apply.
• Check your tariff. If you are on a standard variable tariff and expect the cap to rise in January, compare fixed deals for your home.
• High gas user? Keep an eye on Ofgem’s plans for the standing charge in 2027, as it may increase what you pay per kWh.
• Running a business? Note your contract end date and compare before it renews.

Sources: the Chancellor’s Budget statement of 28 October 2026 as reported by Energy Live News, Which? and The Big Issue; Resolution Foundation. The official Budget documents may add detail, such as payment dates and how the devolved governments will pay the £100. We will update this page when they are confirmed. The 1p-per-kWh figure is our own estimate, not a government or Ofgem figure.