BUDGET 2026: Help with energy bills announced

The Chancellor has announced a new package of support to help struggling households cope with a predicted 25% rise in energy bills in January 2027.

The measures include an extension of the removal of VAT from electricity bills “through the winter and spring to July, taking £50 off the annual price cap”.

There will also be a one-off £100 energy payment for 20 million households living in council tax A to D band homes in an effort to tackle rising bills. It will be paid “directly into people’s bank accounts”.

The Chancellor has also announced plans to scrap gas standing charges. That change will come into effect next year.

Standing charges are the fixed daily fees households pay for access to gas and electricity, regardless of how much energy they use. Removing or reducing them could benefit some households, particularly those that use very little energy. However, if suppliers recover these costs through higher unit rates, people who use more energy could end up paying more.

The announcement follows warnings that a sharp increase in energy prices could put further pressure on household budgets this winter, potentially wiping out some of the savings from earlier Government measures.

What could this mean for you?

If you live in a property in council tax bands A to D, you should receive a one-off £100 payment to help with your energy bills. Keep an eye out for details of when the money will be paid and whether you need to take any action to receive it.

The extension of the electricity VAT suspension could also provide some extra relief, with the Government estimating it will take £50 off the annual price cap. However, this is not necessarily £50 off every household’s bill, as the amount you pay will still depend on your energy use and tariff, so don’t bank on it.

The removal of gas standing charges could benefit you if you use relatively little gas, as you would no longer pay a fixed daily fee. But if you use a lot of gas, you could see less benefit, or even pay more, if suppliers increase their unit rates to recover the costs.

Don’t assume these measures will cover the full impact of rising energy prices. Check whether you’re eligible for other support, compare energy tariffs to see if you could save money, and review your household’s energy use where you can.

If you’re struggling to pay your bills, contact your energy supplier as soon as possible. They may be able to offer support or agree a payment plan. You can also check whether you’re entitled to benefits or other help with household costs.