Oct
UK Government introduces temporary zero VAT rate on qualifying supplies of electricity
Who this will interest: Electricity suppliers in Great Britain providing electricity for domestic use.
Key point(s): A zero rate will apply to qualifying supplies of electricity in Great Britain from 1 October 2026 until 31 March 2027. Northern Ireland is excluded from the application of the zero rate.
Essentia’s take: The mainland UK VAT system continues its slow post-Brexit divergence from EU rules, where a minimum rate of 5% applies.
Action points: Electricity suppliers need to update their invoicing and VAT codes to apply the new zero rate between 1 October 2026 and 1 April 2027.
In detail
The VAT rate on qualifying supplies of electricity in Great Britain will be lowered from 5% to 0% between 1 October 2026 and 31 March 2027. Qualifying supplies include electricity supplied for domestic use or for a charity’s non-business use.
Northern Ireland is excluded from the application of the zero rate as it follows different rules in relation to the application of zero rates. The 5% reduced rate will therefore continue to apply in Northern Ireland.
Other fuel types are not affected by this change.
Impact on businesses
Electricity suppliers will need to update their invoicing and VAT codes in order to ensure the correct application of the zero rate between 1 October 2026 and 1 April 2027.