Electricity bill tax cut expected to take around £45 a year off household bills
VAT on household electricity bills will be scrapped from 1 October, a change the UK government estimates will take around £45 a year off a typical bill for homes across Flintshire.
The cut, from 5 per cent to zero, was announced by Andy Burnham on his second day as Prime Minister.
It applies to electricity only, not gas, and is timed to take effect alongside the next Ofgem price cap.
The Treasury says the estimated £45 saving comes on top of £150 removed from energy bills at the last Budget.
Suppliers are expected to pass the reduction on to all customers, including those on fixed tariffs.
That means households in Flintshire will see the change automatically, with no need to switch tariff or apply for anything.
Small businesses that qualify for the domestic energy VAT relief and are not registered for VAT will also benefit, along with charities and residential care homes eligible for the reduced rate.
The cost of the cut this financial year, estimated at around £850m, is being covered by cancelling the Digital ID programme, which had been due to cost £1.8bn over three years.
The Treasury says any further decisions, including funding for longer-term measures, will be taken at the Budget.
Andy Burnham, Prime Minister, said:
“Westminster has not been working for people for too long, with families struggling with the cost of living.
“That needs to change. I said I wanted to give people breathing space, and that’s what I’m announcing on my second day as Prime Minister.
“We’re taking immediate action to cut taxes on energy bills, put more money in people’s pockets and bring back hope.”
John Healey MP, Chancellor of the Exchequer, said:
“For too long, too many people have struggled with the cost of living.
“Today’s energy tax cut will give families some breathing room on bills, and provide some reassurance this winter.
“This measure is funded this year from cancelling the Digital ID programme, and it will help bring down inflation while supporting households in every postcode.”
The government estimates the VAT cut will reduce CPI inflation by around 0.10 percentage points.
Updated costs for the measure will be set out at the Budget.
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