Image of three wooden blocks each on a stack of coins with the letters V A T on each of the blocks

VAT cut must be passed on to households, warns ATT

21 July, 2026

The Government should take steps to ensure savings from its cut to VAT on domestic energy use are passed on to households, warns the Association of Taxation Technicians.

In one of his first acts as Prime Minister, Andy Burnham announced yesterday that he would temporarily remove VAT from domestic electricity bills from October 1.1 He said the move would give households struggling with the cost of living more “breathing space”.

ATT has warned that there must be a process to ensure the VAT savings made are passed on to households.

Emma Rawson, director of public policy for the Association of Taxation Technicians, said:

"The Prime Minister has wasted no time in announcing this cut, but we would like to see assurances that the savings will be passed on to households.

“The Government has said it expects energy providers to pass the VAT reduction on to customers, including those on fixed tariffs, as they did with the £150 of costs taken off energy bills announced at the last Budget.”

“However, there appears to be no clear consequences for those who do not, meaning this saving is not guaranteed. It is important households feeling the squeeze are protected by this move.”

The Association has also called for a wider plan to address areas of complexity in the VAT regime, including the VAT treatment of food and drink, rather than making further short term changes to policies, such as the temporary reduced rate2 of VAT for hospitality, holiday accommodation and admission to attractions.

Notes for editors:

  1. Gov.uk Press release: New PM cuts tax on household electricity bills to give breathing space on cost of living.
  2. VAT: temporary reduced rate for hospitality, holiday accommodation and attractions.