A VAT cut on household electricity bills announced by Prime Minister Andy Burnham will not apply in Northern Ireland. The government estimates the change will save a typical household in Great Britain about £45 over six months, while Stormont ministers will instead receive extra funding from the UK government for cost of living measures.
In Great Britain, the VAT rate on electricity bills will be cut from 5% to 0% in October. The amount of money coming to Northern Ireland, and how and when it will be spent, is so far unclear.
The VAT cut is not being applied in Northern Ireland because of complications related to the region's Brexit deal.
Prime Minister Andy Burnham says he will remove VAT from electricity bills in October
The Treasury said:
"Under the terms of the UK's exit from the EU, EU VAT rates apply in NI on goods, including electricity.
"Agreement from the EU to implement in NI would be necessary.
"Therefore to ensure that households in NI receive the same support as quickly as the rest of the UK, the NI Executive will receive comparable funding to enable it to support NI households with the cost of living."
VAT in Northern Ireland first emerged as a post-Brexit issue in 2022 when the then Chancellor, Rishi Sunak, reduced VAT on "energy goods" such as solar panels and heat pumps from 5% to 0%.
That cut could not be automatically applied here due to EU rules limiting the range of goods to which can be sold without VAT.
The issue was partially addressed in the Windsor Framework deal in 2023 and the VAT cut was then applied in Northern Ireland.
What happens at the first cabinet meeting?
The new cabinet will meet for the first time later on Tuesday, after Burnham became prime minister on Monday.
A Downing Street spokesperson said Burnham had calls with the first minister of Scotland, the first minister of Wales and the first minister and deputy first minister of Northern Ireland on Tuesday.
"The Prime Minister said he was serious about creating a new politics - rooted in finding common ground based on collaborative, practical and pragmatic relations with the heads of the devolved governments."
The spokesperson said Burnham was
"focused on practical measures, not constitutional changes like further referendums, to give families more breathing room by helping them with the cost of living".
Burnham says he will scrap VAT from household electricity bills as new cabinet to meet for first time
Solar panels among goods to see VAT cut in NI
