Global Daily Tax News, UK Legislates For Electricity VAT Zero Rate, (Sep 10, 2026)

The UK Government has issued legislation to introduce a temporary zero rate of VAT for qualifying supplies of electricity in Great Britain, for the period October 1, 2026, to March 31, 2027.

The rate will remain five percent on all other types of domestic fuel UK-wide. In Northern Ireland, the rate of VAT on supplies of qualifying electricity will remain unchanged.

The effect of the change is that domestic electricity bills will have no VAT charged, reducing costs to households over the winter months when energy consumption is highest.

The Order modifies Schedule 7A and Schedule 8 of the VAT Act 1994. These Schedules describe supplies which are charged to VAT at five percent and zero percent, respectively.

The Statutory Instrument modifies Schedule 7A to restrict supplies of electricity qualifying for the reduced rate of VAT of five percent to those supplied in Northern Ireland.

Further, the Statutory Instrument inserts a new Group 24 in Schedule 8, 'Domestic Electricity: England and Wales and Scotland'. The description of these supplies is the same as the current description in Schedule 7A.

The effect of the changes is to maintain the reduced rate in Northern Ireland and introduce a zero rate in Great Britain but maintain the existing descriptions of when those supplies qualify for relief.