Chancellor announces £100 household payment and electricity VAT cut extension
The government has introduced new financial support for households and extended current energy bill tax relief in the latest Autumn Budget.
Key points
- Approximately 20 million households in council tax bands A to D will receive a one-off payment of £100.
- The VAT reduction on electricity bills has been extended by the government until July 2027.
- Chancellor John Healey stated that cancelling planned fuel duty rises will support both consumers and businesses.
In his Autumn Budget speech on 28 October 2026, Chancellor John Healey announced a series of financial measures. These include a new £100 payment for millions of households and an extension to the existing VAT relief on electricity bills.
The Chancellor also confirmed the cancellation of planned fuel duty increases. These changes are intended to provide support to households and businesses across the country.
New household payments
The government announced a one-off £100 payment for an estimated 20 million households. To be eligible, households must be in council tax bands A to D. This programme will cost the government £2.6 billion.
Energy bill measures
The VAT cut on electricity bills is now extended until July 2027. According to the Chancellor, this change will reduce the annual price cap by £50. The government also intends to propose reforms to electricity standing charges, similar to previous changes announced for gas bills.
Support for businesses will arrive in April 2027 through the British Industrial Competitiveness Scheme. This scheme is intended to assist 10,000 eligible firms in specific industrial sectors by reducing their electricity costs by up to 25%.
What it means for you
- If you reside in a property within council tax bands A to D, you are in the group identified for the new £100 payment.
- Your electricity bills will continue to benefit from the current VAT reduction until July 2027, which the government says will lower the annual price cap.
Sources
We compared these reports before writing and checked every figure, date and name in this story against them. Read them for the full detail.
- Energy Live News: Electricity bill VAT cut will be extended until July (28 Oct)
- The Guardian: Labour's 2026 budget in under three minutes – video (28 Oct)
Spotted a mistake? Email us. This story is based on the reports above and its facts were checked against them; it is not financial advice.
