VAT will be cut from household electricity bills from 1 October, the government has announced as part of new prime minister Andy Burnham's plan to help with the cost of living. The reduction from 5% VAT is expected to save a typical household about £45 a year.
Ministers said the measure will be funded by savings from cancelling the digital ID programme, which was due to cost £1.8bn over the next three years. The government said the announcement is estimated to cost £850m this financial year.
New chancellor John Healey said the announcement would
"provide some reassurance this winter."
The announcement came the day after Burnham became the UK's seventh prime minister since 2016 with a pledge to
"bring back hope"to Britain.
Former defence secretary John Healey was appointed chancellor as part of Burnham's cabinet appointments on Monday. He replaced Rachel Reeves, who had served as Sir Keir Starmer's chancellor since Labour's 2024 landslide election win.
Burnham's new cabinet is due to meet for the first time at lunchtime on Tuesday.
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What has the government announced?
The government has announced that VAT on household electricity bills will be reduced from 5% on 1 October as part of its cost-of-living plan.
How much will households save?
A typical household is expected to save about £45 a year from the VAT reduction.
How will the cut be paid for?
Ministers said the measure will be funded by savings from cancelling the digital ID programme, which was due to cost £1.8bn over the next three years. The government said the announcement is estimated to cost £850m this financial year.
What did ministers say about the move?
John Healey said the announcement would
"provide some reassurance this winter."
What is the political background?
The announcement came the day after Burnham became the UK's seventh prime minister since 2016 with a pledge to
"bring back hope"to Britain. Former defence secretary John Healey was made chancellor as part of Burnham's cabinet appointments on Monday, replacing Rachel Reeves, who had served as Sir Keir Starmer's chancellor since Labour's 2024 landslide election win. Burnham's new cabinet is due to meet for the first time at lunchtime on Tuesday.
This breaking news story is being updated and more details will be published shortly. Please refresh the page for the fullest version.
You can receive Breaking News on a smartphone or tablet via the App. You can also follow @BBCBreaking on X, external to get the latest alerts.
