Autumn Budget 2026: what it could mean for your household’s energy bills

The government has announced three measures aimed at helping households cope with rising energy costs.

The support includes asking Ofgem to remove the current gas standing charge we all pay on our gas bills next year, or as soon as possible thereafter, a new £100 Council Tax rebate for eligible homes, and a three-month extension to the temporary VAT cut on electricity.

The three energy bill support measures announced in the 2026 Autumn Budget:

The standing charge we currently pay on our household gas bills will be removed in 2027, or as soon as possible after.
20 million homes in council tax bands A – D will be eligible for a £100 one-off payment.
The temporary 0% VAT cut on household electricity will be extended to July 2027.

How does the 2026 Autumn Budget affect household energy bills?

Gas standing charge will be removed

The Chancellor has asked Ofgem to remove the standing charge on our gas bills in 2027, or as soon as possible thereafter.

For our household gas use, we currently pay:

A standing charge for our gas - a fixed amount that we get charged daily, regardless of how much energy we use
A unit rate for every unit of gas we use in our home

The government estimates that approximately 60% of households could save an average of £45 a year, as a result of this shift. However, how much you’ll save will depend on how much gas you use in your home, and some homes may end up paying more.

The cost that the gas standing charge currently covers will instead be moved onto the gas unit rate we pay.

Lower gas users could save money as they'll no longer have to pay a fixed daily charge for their gas, even if they don’t use very much gas in their homes. However, if you use a lot of gas in your home, you may end up paying more, even though the daily charge is being removed.

£100 household winter energy payment

Households that fall into the council tax band categories A to D, will be given a one-off £100 payment this winter to help pay towards the rising energy costs we are set to continue experiencing over the next year.

The government will announce later in the year when, and how, the £100 will be paid into bank accounts, and if households will need to do anything to receive the payment.

Funding will also be made available to the devolved governments in Scotland, Wales and Northern Ireland, encouraging each of them to adopt the same measure.

The temporary electricity VAT cut is set to continue until July 2027

On 1 October 2026, the government temporarily reduced the VAT on household electricity from 5% to 0%, with a view to it ending in the spring. This was applied automatically and all customers, including those on fixed tariffs, were included.

However, the temporary cut is now being extended until July 2027. The government suggests the tax cut will take about £45 off the yearly Ofgem price cap. It’s worth remembering that household savings will depend on how much electricity you use and the type of tariff you’re on. The VAT we pay on household gas remains at 5% and separate arrangements apply in Northern Ireland.

FAQs

Who will get the £100 household energy payment?

The £100 payment is expected to be paid out to households in the council tax bands A to D. Check your latest council tax bill or official council tax band checker if you’re not sure which band applies to your home.

Do I need to apply for the £100 payment?

According to the government, the payment will go directly into bank accounts, but we don’t yet know how, or when, this will happen.

When will the £100 payment be made?

This hasn’t been announced yet.

Will I pay less now the gas standing charge has been removed?

As the standing charge is expected to be spread over the unit rates we pay for gas, essentially the more gas you use, the more you pay. Meaning, lower-use households are more likely to save, while some higher-use households may pay more.

When will the gas standing charge be removed?

The exact date is yet to be confirmed but the government said from 2027, or as soon as possible after that.

Does the VAT cut apply to gas as well as electricity?

No. The temporary VAT 0% rate only applies to electricity, not to household gas – this remains fixed at 5%.

Will the VAT cut apply if I am on a fixed tariff or use a prepayment meter?

Yes - prepayment customers should get the benefit automatically applied through normal top-ups, and again, it’s automatically applied to all customers whether they’re using a fixed or variable tariff.

Is this instead of the Warm Home Discount?

No. The Warm Home Discount is separate. If you qualify for the Warm Home Discount, you’ll get the £150 off your electricity bill on top of the new measures this budget introduces.

Written by Dan Alchin - Head of Policy and Regulation
Dan Alchin heads up EDF’s policy team focused on customers and the retail supply market. Prior to EDF, Dan worked at Energy UK, the trade association for the energy industry, in a number of senior positions.