Electricity VAT is being reduced to 0%: what this means for Outfox Energy customers

The government has announced that VAT on domestic electricity will be cut from 5% to 0%.

We’ll automatically apply the new 0% VAT rate to eligible domestic electricity charges. This applies to all domestic electricity tariffs. So, whether you are on a fixed, variable, tracker, EV, Weekend, or Prepayment Meter (PPM) tariff, the VAT reduction will be applied to your electricity charges automatically.

There’s nothing you need to do. You don’t need to contact us, apply for the reduction, switch your tariff or change anything on your account.

What is changing?

From 1 October 2026, VAT on domestic electricity drops from 5% to 0%.

The reduction covers eligible domestic electricity charges – that includes both the unit rate and the standing charge on your electricity. We’ll update this article if the government makes any further announcements.

Will the reduction apply to my tariff?

Yes. The 0% VAT rate will be applied automatically to all domestic electricity tariffs, regardless of which tariff you are on. This includes:

fixed tariff
variable tariff
tracker tariff
EV (Electric Vehicle) tariffs
Weekend tariffs
Prepayment Meter (PPM) tariffs

If you’re on a fixed tariff, the underlying unit rates and standing charges you agreed remain the same. The change is to the VAT applied to the electricity part of your bill, which will fall to 0% for the announced period.

If you’re on a variable or tracker tariff, the 0% VAT rate will be applied separately from any price changes that may happen under the terms of your tariff.

You don’t need to switch tariff or renew to benefit.

Do I need to apply or contact Outfox Energy?

No. This isn’t a rebate, account credit or application scheme.

We’ll make the change automatically. You do NOT need to:

contact us
complete an application
change tariff
update your payment method
make any changes to your account

Does the VAT reduction apply to gas?

No. The Government’s announcement covers domestic electricity only.

If Outfox Energy supplies both your gas and electricity, the reduction will apply only to the electricity part of your charges. VAT will still be added to your gas charges at the rate that applies at the time.

How much could I save?

The government estimates that, from October, a typical household on the Ofgem price cap will see an annualised saving of around £45.

That’s a national estimate, not a guaranteed £45 payment or account credit. Your actual saving will depend on:

how much electricity you use
your tariff and prices
how long the VAT reduction applies
any other price changes during the period

Customers who use more electricity are likely to save more; those who use less are likely to save less.

What the change from 5% to 0% actually means

If the electricity part of your bill comes to £60 before VAT, 5% VAT would add £3. With 0% VAT, that £3 is no longer charged.

It is not a flat 5% discount on your whole gas and electricity bill. It is the removal of the 5% VAT that applies to eligible domestic electricity charges only.

How will the reduction appear on my bill?

We’ll automatically apply 0% VAT to your eligible electricity charges from 1 October 2026.

If you get a combined bill for gas and electricity, the two fuels will show different VAT treatment, because the reduction only applies to electricity.

Will my monthly Direct Debit reduce?

The VAT reduction will lower the cost of your electricity compared with what it would have been. But that doesn’t mean your monthly Direct Debit will change straight away.

Your Direct Debit is a regular payment towards your energy account – it isn’t a bill for one specific month’s usage. When we review it, we look at things like:

your account balance
your estimated annual usage
your tariff prices
expected seasonal changes in consumption

If your Direct Debit does need to adjust, we’ll let you know at least 10 working days before we take the new amount. There’s no need to get in touch with us just because of the VAT announcement.

Does this mean my overall energy bill will definitely fall?

Not necessarily. The VAT reduction makes your electricity charges lower than they would have been without the change, but your overall bill can still be affected by:

how much gas and electricity you use
changes to variable or tracker tariff prices
changes to the Ofgem price cap
your account balance
seasonal increases in energy use

Even if another factor causes your overall bill to increase, you will still benefit from paying 0% rather than 5% VAT on eligible domestic electricity charges during the announced period.

For further information, you can read the Government’s announcement.