Autumn Budget 2026: what it means for your energy bills
Updated: 28 October 2026, after the Budget. This now covers what was actually announced, taken from the Budget 2026 document published on GOV.UK. My preview from this morning is further down as background.
Short answer first: the Budget brings a £100 payment from January 2027 for up to 20 million households in England in council tax bands A to D, keeps electricity VAT-free until July 2027, and will scrap gas standing charges by the end of 2027, with the cost moved onto the unit rate. The trailed Warm Home Discount top-up didn't happen.
None of this lands before Christmas. The £100 comes from January and the VAT extension matters from April, so for the next couple of months your bills are set by Ofgem's cap, not the Budget.
What was announced
A £100 Household Energy Payment from January 2027
The headline measure. From the Budget document:
- Who: households in England in council tax bands A to D, "supporting up to 20 million households". The government estimates it will reach 83% of fuel-stressed households in England.
- When: "from January 2027".
- How: "directly provided to up to 20 million households via the Council Tax system", as a £100 payment. You shouldn't need to apply, but exactly how each council pays it hasn't been set out yet.
- Scotland, Wales and Northern Ireland: the devolved governments get their share of the £2.6 billion through the Barnett formula. Healey urged them to introduce similar support, as reported here, but it's up to them whether and how.
- Paid for by: a temporary rise in the Bank Corporation Tax Surcharge from 3% to 6%, from 1 January 2027 to 31 March 2028.
It isn't the Warm Home Discount top-up that was trailed. It's a separate payment based on council tax band rather than benefits, so far more households get it.
Be wary of any text, email or call asking for bank details to "claim" this. Scammers jump on announcements like this within hours, and the Budget says it comes through the council tax system.
VAT-free electricity extended to July 2027
VAT on household electricity in Great Britain was cut to 0% on 1 October 2026 and was due to go back up on 1 April 2027. The Budget extends it "for another three months, until July 2027", which "is expected to take around £50 off the annual Ofgem price cap in April 2027".
Northern Ireland wasn't covered by the original cut (see HMRC's guidance), but the Budget says "extended VAT relief is expected to apply in Northern Ireland from April 2027".
You don't need to do anything. It's applied to the price per unit, so it comes off automatically, including on fixed tariffs.
Gas standing charges abolished, by the end of 2027
The government has asked Ofgem to abolish gas standing charges on household bills, "aiming for delivery by the end of 2027", according to the Budget document and the Treasury's press release.
- The cost moves onto the unit rate. Ofgem will make suppliers recover it through gas unit rates instead. The standing charge is £108 a year on average today.
- Winners and losers. The government says it "could save 60% of account-holding households around an average of £45 off their annual bill". The other 40%, the higher gas users, will pay more. MoneySavingExpert estimates the average gas unit rate could rise from 7.97p to about 9.11p per kWh, and Martin Lewis puts the dividing line somewhere around 12,500 kWh of gas a year. Both are their estimates, not official figures.
- Help for those who lose out. The government will set out "targeted mitigation". No detail yet, including on prepayment.
So if you live alone, or in a well-insulated flat, this should help. If you heat a large or draughty house with gas, you may pay a little more. Either way, it doesn't touch your bill this winter.
Everything else for household bills
- Electricity standing charges: not scrapped. The government is "committing to reform electricity standing charges and will set out details next year".
- No new policy costs on bills: "no new policy costs will be put on bills until a comprehensive Cost Control Framework is in place". That framework comes at the 2027 spending review.
- A planned new tax on gas bills is scrapped: the Gas Shipper Obligation "will not be introduced as planned".
- Energy debt: household energy debt has "almost tripled to over £5 billion". A new Energy Debt Circuit Breaker brings reforms to stop debt building up and "a one-off targeted debt relief scheme for eligible households", which the government says saves all billpayers around £30 by 2030.
- Fuel duty: the 5p cut stays and the planned rise is deferred to 1 July 2027.
- Warm Homes Plan: £1 billion of capital grant is saved from it, but "the majority of WHP funding for low-income households and social housing" is protected. The Boiler Upgrade Scheme stays at £400 million in 2027-28.
- Businesses: around 10,000 energy-intensive manufacturers get a 20% to 25% electricity discount through the British Industrial Competitiveness Scheme, starting in April 2027.
What wasn't announced
- No Warm Home Discount top-up. The Budget document doesn't mention a change to the Warm Home Discount. The £100 payment went by council tax band instead.
- No removal of the remaining levies from electricity bills, beyond the freeze on new policy costs above.
- Nothing specific on prepayment yet.
Background: where bills stood going into the Budget
It helps to know the starting point, because it explains why energy is near the top of the list.
From 1 October to 31 December 2026, Ofgem's price cap is £1,723 a year for a typical household paying for gas and electricity by Direct Debit. That's up 4%, or £60 a year, on the summer. Ofgem puts the rise down to higher wholesale gas prices from the conflict in the Middle East, with wholesale prices up 11% over the three months it looked at.
The detail matters more than the headline. Ofgem's figures for the default tariff, averaged across Great Britain:
| Unit rate | Standing charge | |
|---|---|---|
| Electricity | 26.32p per kWh | 54.83p a day |
| Gas | 7.97p per kWh | 29.68p a day |
Gas bills went up 8% this time. Electricity stayed broadly flat, because the government took VAT off household electricity from 1 October 2026 to 31 March 2027. Ofgem says that without it, the rise would have been about £45 higher.
The bigger worry is January. Cornwall Insight, the consultancy most people quote on the cap, forecast on 30 September that the January to March 2027 cap could rise 16% to £1,999 a year, an increase of £276. It blamed disrupted gas supplies and low gas storage in Europe. Ofgem confirms the real figure by 25 November.
So the Budget lands just before what could be the biggest jump in bills since January 2023. That's the backdrop.
Background: what had already changed this year
Two measures from earlier in the year are already in your bill.
The £150 cut from April 2026. The November 2025 Budget took an average of £150 off household bills from April this year. It did it by ending the Energy Company Obligation (an insulation scheme paid for through bills) on 31 March 2026, worth £59, and moving 75% of the Renewables Obligation onto general taxation, worth £88. Lower VAT on both added £7.
The VAT cut on electricity. As above, VAT came off household electricity on 1 October. It's worth about £45 a year to a typical household. It was due to end on 31 March 2027, and the Budget has extended it to July 2027 (see "What was announced").
Background: what was trailed before the speech
This is what I wrote this morning, from the reporting in the run-up. What actually happened to each is in the table below.
More money for poorer households through the Warm Home Discount
The Warm Home Discount is currently £150 a year, taken off the electricity bill of households on qualifying means-tested benefits such as Pension Credit and Universal Credit. Around six million households got it last year after it was widened.
The Guardian reported that Healey is considering adding another £100 to it, as part of more than £1bn of support for less well-off households, as relayed by The Independent. Which? also covered it, noting this top-up would be paid for by taxpayers rather than bill-payers. That matters, because the existing discount is funded through everyone's bills.
If it happens, this is the measure most likely to make a real difference this winter for the households struggling most.
Cutting standing charges on gas
The Telegraph reported that the Prime Minister has asked Healey and the Energy Secretary, Miatta Fahnbulleh, to look at scrapping standing charges on gas bills, according to LBC. Together with limits on the Energy Secretary's power to add net zero charges to household bills, the report says this could cut household gas bills by up to £50 a year.
Standing charges are the daily fee you pay before you use anything. They've been unpopular for years because they hit low users hardest. On the current cap, the gas one alone is about £108 a year (29.68p a day).
I'd treat this one with some caution. Scrapping a standing charge doesn't make the cost disappear: it has to be recovered somewhere, usually through a higher unit rate. Whether that's good for you depends on how much gas you use.
Moving more levies off bills
There's an argument going on inside government about the remaining policy costs on bills. The Independent reported that Fahnbulleh has called for all the remaining green levies to come off bills, that Healey has pushed back, and that Fahnbulleh hinted the cost could be shared through taxation.
Consumer groups want the same. Which? has called for the remaining environmental and social charges to be moved off electricity bills and funded from general taxation, and estimates that could save households £75 to £286 a year. Bloomberg reported that businesses are hopeful Healey will cut levies from their electricity bills too.
This is the most expensive option on the table, which is exactly why it's the least certain.
A freeze on January's fuel duty rise
Not a household energy bill, but it's in the same conversation. Fuel duty is due to rise on 1 January, from roughly 53p to nearly 56p a litre, after the temporary cut was unwound. LBC reports that Healey is expected to cancel that rise.
Background: what the Chancellor said beforehand
Healey was careful not to pre-announce anything, but the direction was clear. He told ITV News that "energy costs are punishing at the moment" and that the government will "do what we can in the Budget" for households and businesses, as reported by Which?.
Ahead of the speech, he said he wants "to start the long-term action needed to get energy costs down for good", and that "conflicts abroad are pushing up energy prices", according to LBC.
He's also sticking with the fiscal rules set by Rachel Reeves: day-to-day spending paid for by taxes rather than borrowing, and debt falling as a share of the economy, both by 2029/30. That's the brake on all of the above. Every pound of bill support has to be found somewhere else.
At a glance: what was trailed, and what happened
| Trailed measure | What happened | Who it helps | When |
|---|---|---|---|
| Warm Home Discount top-up (+£100) | Not announced. A £100 Household Energy Payment by council tax band instead | Up to 20 million households in England, bands A to D | From January 2027 |
| Scrapping gas standing charges | Announced. Cost moves onto the unit rate; government says around £45 a year off for 60% of households | Lower gas users; higher users pay more | Aiming for the end of 2027 |
| Remaining levies off electricity bills | Not announced. No new policy costs on bills until a Cost Control Framework is in place | Everyone, by stopping new costs | Framework at the 2027 spending review |
| Fuel duty rise cancelled | Announced. 5p cut kept, rise deferred | Drivers | To 1 July 2027 |
| VAT-free electricity past March 2027 | Announced. Extended, around £50 off the annual price cap | Households in Great Britain; Northern Ireland expected from April 2027 | Until July 2027 |
All figures are from the Budget 2026 document.
What you can do now
The honest truth is that £100 in January won't fully offset a 16% rise in January if Cornwall Insight's forecast is right, and the gas change doesn't arrive until 2027. So it's still worth doing the boring things now.
Look at a fixed tariff. Ofgem's own Neil Kenward said in August that fixed tariffs were available "at £100 or more below the October price cap". With a big January rise forecast, fixing could be worth it. Check exit fees and compare against what you'd pay on the cap, not just the headline price.
Check you're getting the Warm Home Discount if you qualify. GOV.UK says you'll usually get it automatically if you're eligible, but in Scotland you may need to apply to your energy supplier. It's taken off your bill rather than paid to you, and prepayment customers can get it as a top-up voucher. If you're on a qualifying benefit and haven't had it before, that page links to the rules for each country.
Use your own usage to decide. If you have a smart meter, our Should I switch? tool takes your half-hourly usage file and works out what you'd have paid on each tariff, including the time-of-use ones. If you're on Agile, my earlier post on who Agile suits is worth a read before January.
Cut gas use first. This time it's gas driving the rise. Turning the boiler's flow temperature down is free and one of the more effective changes. I've written about how to do it.
What happens next
- By 25 November: Ofgem confirms the January to March 2027 price cap. That's the next big number for your bill.
- From January 2027: the £100 Household Energy Payment starts reaching households in England through the council tax system. Watch for details from your council.
- Next year: details of the electricity standing charge reform, the targeted help for households who lose out from the gas change, and how the devolved governments use their share.
- By the end of 2027: gas standing charges are due to go.
I'll write a follow-up when Ofgem announces the January cap.