Autumn Budget 2026 · Energy Bills
Autumn Budget 2026: What It Means for Your Energy Bills
A £100 payment for 20 million homes, the end of standing charges on gas bills, and 0% VAT on electricity until July 2027. Here's what the Budget means for your bills, and what to do before January.
Updated 28 October 2026, after the Budget speech
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The short answer
On this page:
What the Budget announced on energy
Chancellor John Healey made energy bills the centrepiece of his first Budget, promising families "breathing space" on the cost of living. There are three measures that affect your bills directly, paid for in part by a time-limited 3% rise in the surcharge on banks.
| Measure | Who gets it | How much | When |
|---|---|---|---|
| £100 energy payment | About 20 million households in council tax bands A to D | £100, paid into your bank account | This winter |
| Gas standing charge removed | Households with a gas supply, about 23 million | About £45 a year for 6 in 10 households; heavy users may pay more | Next year |
| 0% VAT on electricity extended | Every household | Keeps 5% VAT off electricity for four more months | Now until July 2027 |
| Hydrogen levy on gas shippers scrapped | Gas bill payers | Removes a planned cost from gas bills | To be confirmed |
Source: the Budget speech, 28 October 2026, as reported live by MoneyWeek and GB News. We will add HM Treasury's detail on how and when the £100 is paid as soon as it is published.
The £100 energy payment
The biggest new measure is a one-off £100 payment towards energy bills this winter for about 20 million households in council tax bands A to D. The Chancellor said it will be paid directly into eligible people's bank accounts, so it doesn't depend on your energy supplier. The government has not yet said exactly when it will be paid or whether you need to do anything to get it. Be wary of any text, call or email asking for your bank details to "claim" it.
The £100 payment is a one-off. It sits alongside the £150 Warm Home Discount, which is paid off the electricity bills of eligible households on means-tested benefits. If you are struggling to pay, contact your supplier before you fall behind and ask what support you qualify for. Households on low incomes may also qualify for free upgrades through ECO4, which closes on 31 December, and the Warm Homes Plan.
Gas standing charges are being scrapped
Standing charges are the fixed daily fee you pay for your gas supply whether you use any gas or not, currently about 30p a day or £108 a year. The Chancellor confirmed they will be scrapped on household gas bills, with Ofgem asked to fold the cost into the price per unit instead. The Treasury says about 60% of households will save around £45 a year. Homes that use a lot of gas could pay slightly more, because more of the cost moves onto every unit. Similar reforms for electricity bills will follow.
This changes some long-running sums. One argument for going all-electric was saving the gas standing charge by having the gas supply capped. Once that charge goes, a home that uses very little gas, for cooking or a backup boiler, pays far less to keep its connection. Our heat pump vs gas boiler and electric heater vs central heating comparisons will be updated once Ofgem sets out how the change works.
What it means for your bill this winter
The Budget does not change the price cap itself. Ofgem sets it every three months. From 1 October the cap is £1,723 a year for a typical dual-fuel home paying by Direct Debit. Cornwall Insight forecasts a 16% rise to about £1,999 from 1 January, the biggest rise since January 2023, and Ofgem will confirm the real figure by 25 November.
| Now (Oct to Dec 2026) | January forecast | |
|---|---|---|
| Typical yearly bill | £1,723 | £1,999 |
| Electricity, per kWh | 26.32p | 30.28p |
| Gas, per kWh | 7.97p | 9.76p |
| A 2kW electric heater, per hour | About 53p | About 61p |
Forecast from Cornwall Insight, 30 September 2026. See our January price cap guide for the other forecasts and what each appliance would cost.
For a household in bands A to D, the £100 payment covers about a third of the £276 rise forecast for January. The 0% VAT on electricity now carries on until July, so it covers the whole of the January to March period.
VAT on electricity
VAT on domestic electricity fell from 5% to 0% on 1 October and was due to go back up after 31 March 2027. The Budget extends the 0% rate to July 2027, so electricity stays VAT-free through the rest of the winter and spring. Gas still carries 5% VAT. Our October price cap guide explains what the VAT cut did to bills.
What you can do now, whatever the Budget says
The cheapest unit of energy is the one you don't use. These are the changes that pay back fastest before January:
Want to cut your bill for good, not just this winter?
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Grants and schemes still open
| Scheme | What it gives | Deadline |
|---|---|---|
| ECO4 | Free insulation and heating upgrades for eligible low-income homes | Work finished by 31 December 2026 |
| Boiler Upgrade Scheme | A grant towards a heat pump, for homeowners in England and Wales | Open |
| Warm Homes Plan | Grants and loans for home upgrades | Rolling, to 2030 |
| Warm Homes loan | Cheaper loans for solar, batteries and heat pumps: up to 5 percentage points off, some interest-free, from 10 lenders, across the UK | Open now (lenders named 27 October) |
The Budget did not change these schemes. Thinking about a heat pump? Start with are heat pumps worth it and the heat pump running cost calculator.
Autumn Budget 2026 and energy: FAQ
Related Guides
Figures checked on 28 October 2026. Price cap figures from Ofgem; January forecast from Cornwall Insight (30 September 2026). Some links on this page are affiliate links: we may earn a commission at no extra cost to you.