The removal of VAT from electricity bills takes effect from today, confirming a tax cut that removes roughly £45 from the annual Ofgem price cap. The change is part of a combined £345 boost for households amid the cost of living crisis.
Who announced the VAT cut
Labour's Andy Burnham, Chancellor John Healey and Energy Secretary Miatta Fahnbulleh announced the HMRC tax reduction, which forms part of the Prime Minister's broader strategy for 'everyday fixes' to provide families with some relief.
Mr Burnham stated the £45 reduction "builds" on the £150 of expenses removed from energy bills in the Budget last year and the "expansion of the £150 Warm Home Discount" to approximately six million households - totalling a £345 boost overall.
What the officials said
Mr Burnham said: "For many families, the energy bill is the one they dread the most. I don't accept that it has to be this way, and I am determined to bring down costs for good."
"But I know people can't wait. Families need breathing space now. That's why, from today, VAT is gone from your electricity bill. And we're going further, capping bus fares at £2 from January and cutting business rates for pubs, social clubs and live music venues," he added.
Further measures and winter relief
Mr Healey said: "This tax cut will help keep energy bills down a bit as we head into the winter. We are acting on cost of living pressures to give people some breathing space for the next few months while we make long-term changes to better shield the country from global shocks like those we face today."
Ms Fahnbulleh stated: "I know energy price rises weigh heavily on homes across the UK this winter. From today, our VAT cut will give households some much needed breathing space, making the energy price cap £45 a year less than it would have been. This follows the £150 of costs we removed from bills earlier this year."
She continued: "Alongside this, we continue to look at what more we can do to protect families from unaffordable bills, as we drive down bills for good through clean power."
