Chancellor extends energy bill VAT cut and announces £100 payment

Summarised from 2 outlets · 3 reports · Updated 28 Oct, 16:14 · Archive

Chancellor John Healey has extended a VAT cut on electricity bills and announced a £100 payment to help 20 million households.

Chancellor John Healey has extended the VAT cut on domestic electricity bills until July, taking £50 off the annual price cap set by Ofgem. The scheme was originally due to end at the end of March 2027. Mr Healey also announced that around 20 million households in council tax bands A to D will receive £100 from the Government this winter to help with energy bills. The energy support package will cost £2.6 billion overall.

Mr Healey said the measures were part of providing 'breathing space' for British households and businesses during what he described as global economic storms. He cited the Office for Budget Responsibility identifying the war in the Middle East as a key driver in economic forecasts, which have seen GDP growth slashed for next year. The Chancellor also hiked taxes on banks and gambling firms to fund the support package, increasing bank tax by an extra 3% for 15 months from January.

For businesses, a new British industrial competitiveness scheme will take 25% off electricity bills for 10,000 firms at the heart of British industry, going live in April with backdated payments for energy costs this year. Mr Healey stressed the Budget was built on 'fiscal discipline' to keep government borrowing and spending under control, whilst remaining committed to making the UK net zero by 2050.

Chancellor extends energy bill VAT cut and announces £100 payment — Image: North Devon Gazette

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How it is being reported

Budget 2026 – what has ‘breathing space’ budget done for Devon and your pocket?£100 energy payment and business rates relief for pubs and cafes are among the headlines in Chancellor John Healey’s Autumn BudgetNorth Devon Gazette · 28 Oct, 15:32
Autumn Budget 2026 15 key changes including £100 cash, state pension, fuel, ISA power billsChancellor John Healey announces key moves to help with cost of living - including a £100 cash boost for 20 million peopleDevonLive · 28 Oct, 13:28
Budget 2026 new '£50' change on energy bills announcedJohn Healey has today announced new measures for millions of UK households over energy billsDevonLive · 28 Oct, 13:00

In this story: John Healey · Andy Burnham · Ofgem · Office for Budget Responsibility · UK

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