UK PM Burnham cuts electricity VAT to 0% from Oct 1

In his first major policy announcement, new British Prime Minister Andy Burnham has eliminated the value-added tax on domestic electricity bills, a move aimed at providing immediate relief from high energy costs. The tax cut, which will take effect on October 1, was unveiled on Tuesday, July 21, 2026, the day after Burnham formally took office.

The reduction from 5% to 0% is estimated to lower the annual energy price cap by approximately £45 for a typical household. The government stated the measure would be funded by cancelling the previous administration’s planned £1.8 billion Digital ID programme. Energy suppliers will be required to pass the saving directly to all domestic customers.

Announcing the policy alongside new Chancellor John Healey, Burnham said the action was a direct response to his pledge to deliver "breathing space" from the cost of living. He stated the government was taking immediate action to cut taxes and put more money in people's pockets. Chancellor Healey said the tax cut would give families some breathing room on bills and provide reassurance for the coming winter, adding that early estimates suggested it could reduce inflation by around 0.1 percentage...