Budget 2026 energy help: £100 payment and gas standing charges

Last updated: 29 October 2026

The Budget on 28 October 2026 announced three things for household energy bills: a one-off £100 Household Energy Payment for most homes in England, the abolition of gas standing charges from the end of 2027, and an extension of the 0% VAT rate on electricity to July 2027. Every outlet has listed them. What the lists don’t tell you is whether you come out ahead — because for the standing-charge change, roughly four in ten households won’t.

This guide works through each measure with the real numbers, and the checker below does the sums for your own home.

Information, not advice. We don’t recommend products or providers. Check the official source linked below before you act.

The £100 Household Energy Payment: who gets it, and when

This is the simplest of the three. If you live in England and your home is in council tax band A, B, C or D, you get £100, paid from January 2027. The Treasury puts the cost at £2.6 billion and says it reaches up to 20 million households — around 80% of homes in England.

The rules, as published by the Department for Energy Security and Net Zero on Budget day:

• You must be liable for the council tax on the property and live in it as your main home. Second homes, empty properties and people who aren’t responsible for the bill (some lodgers and tenants in all-inclusive lets, for example) are excluded.
• Most households that are exempt from council tax — students, for instance — are included, though the government says full criteria will follow.
• If you pay council tax by direct debit, the £100 goes straight into the bank account the direct debit comes from. You don’t need to do anything.
• If you don’t pay by direct debit, your council will invite you to apply. Only your council should contact you about this.

That last point matters more than it looks. A payment that’s “automatic for some, claim-it for others” is exactly the shape of scheme that scam texts imitate. There is no link to click, no fee, and nobody will ever need your card details to “release” the payment. If you’re not sure, go to your council’s own website — not a link in a message.

Band E to H? You don’t get the £100. The government has given English councils a separate £100 million discretionary fund for households outside A–D who are struggling with energy costs. Councils set their own criteria and will publish how to apply; it’s worth checking your council’s site from January.

Scotland, Wales and Northern Ireland? The payment is England-only. The devolved governments receive their share of the money through the Barnett formula and “can provide similar support” — but as of 29 October 2026, none of them has announced what that will be. We’ll update this guide when they do.

Not sure of your band? It’s on your council tax bill, or you can look it up free on gov.uk. And if you think your band is wrong, our council tax guide explains how to challenge it.

Check your own numbers

Put in where you live, your band and your annual usage. The checker shows the three measures separately — the firm ones in pounds, the standing-charge one clearly labelled as an estimate.

Gas standing charges: the one that creates winners and losers

A standing charge is the fixed daily fee you pay for being connected, before you use a single unit. Under the current price cap (1 October to 31 December 2026) the gas standing charge averages 29.68p a day — £108.33 a year — whether you heat a six-bedroom house or never turn the boiler on.

The Chancellor has asked Ofgem to abolish it on household gas bills “by the end of 2027, or as soon as possible after then”. The money doesn’t disappear: the fixed costs it covers move into the unit rate, so what you pay depends on how much gas you use. That’s the whole story in one sentence, and it’s why the change helps some people and costs others.

What the unit rate goes up by

Nobody can tell you this exactly yet, because Ofgem hasn’t decided. But the arithmetic is straightforward. A typical household uses 9,500 kWh of gas a year and pays about £108 in standing charges, so spreading £108 across 9,500 kWh adds roughly 1p per kWh — taking the capped rate from 7.97p to about 9p. Nesta’s analysis, using slightly different assumptions, lands nearer 0.9p; MoneySavingExpert’s back-of-envelope lands at 1.14p. We use 1p as the working estimate throughout, and the checker lets you change it.

The break-even number

Here’s the figure that matters. Your saving from losing the standing charge is a fixed £108. Your extra cost is 1p times your usage. The two balance at:

£108.33 ÷ 1p = about 10,800 kWh of gas a year.

• Use less than that and you come out ahead.
• Use more and you pay more than you do today.

Three worked examples at today’s capped rates:

The Treasury’s own estimate is that 60% of households save, — an average of about £45 a year among those who do; the typical 9,500 kWh home saves about £13; Nesta puts the winners at 63%. Both numbers mean the same thing: a large minority — around 9 million homes — pay more. If you’re in a draughty three-bed semi with the heating on from October, that’s probably you.

The single most useful thing to take from this page: find your annual gas kWh on your statement. If it’s above about 10,800, the end of standing charges is a cost, not a saving — and you have until the end of 2027 to bring your usage under the line (about 10,800 kWh on current estimates). Every 1,000 kWh you cut is worth about £10 of the gap, on top of the £80 or so that 1,000 kWh costs you today.

Three things that aren’t settled

1. The exact uplift. Ofgem will consult on how to recover the costs. If it chooses to load more onto the first units used (a “rising block” structure), the break-even shifts. Treat 10,800 kWh as a rule of thumb, not a boundary.
2. Mitigation for high users who can’t cut back. The government has promised “targeted mitigation for a small number of households” — people who need a warm home for medical reasons, for example. No detail yet.
3. Electricity standing charges. They stay. The Budget says reform “with further details to be announced next year”. The electricity standing charge is currently 54.83p a day, about £200 a year, so this is the bigger prize — but it’s not on the table yet.

The change applies to England, Scotland and Wales, where Ofgem sets the cap. Northern Ireland’s gas market is regulated separately and isn’t covered.

If you’re on the wrong side of the break-even, our save energy at home guide ranks the cuts that actually move your gas usage — heating controls and flow temperature first, draught-proofing second, and the things that sound good but barely register.

Electricity VAT at 0%: already on your bill, now running to July 2027

This one is quiet because it’s already happening. VAT on household electricity in Great Britain dropped from 5% to 0% on 1 October 2026 — the price cap for this quarter is quoted without it, which is why the electricity unit rate fell slightly even though wholesale costs rose. It was originally due to end on 31 March 2027. The Budget extends it by three months, to July 2027.

What it’s worth to you is simply 5% of your electricity cost at the cap:

That’s where the government’s “£45 a year on average” comes from, and why it expects the extension to knock around £50 off the headline price cap in April 2027. Nothing to claim; it’s on your bill automatically. If the January cap rises as forecast, the saving rises with it.

Gas still carries 5% VAT. And Northern Ireland is outside this: GB VAT changes don’t apply there, so NI electricity keeps the 5% rate for now. The Budget says the government is funding the NI Executive to provide “comparable support”, expected from April 2027.

Putting it together: what the Budget is worth to a typical home

Take the Ofgem benchmark household — 9,500 kWh of gas, 2,500 kWh of electricity — in a band C house in England, paying council tax by direct debit:

• £100 Household Energy Payment, January 2027
• about £32 of VAT not paid on electricity from October 2026 to July 2027
• about £13 a year from the end of gas standing charges, once it lands (estimate)

Roughly £145 over the next year or so, of which £132 is firm. Move that same household to a band E house with 14,000 kWh of gas and the picture flips: no £100, the same £32 of VAT, and an estimated £32 a year more on gas from 2028. The Budget’s energy help is genuinely worth something to most people — but the spread between households is wide, which is why the headline figures tell you so little.

None of this changes what the price cap itself does in January. Ofgem confirms the January–March 2027 rates in late November; the current forecast is for a rise. Our energy price cap tracker has the live numbers, and the cut your energy bill guide covers whether fixing beats the cap for you.

What else was in the Budget for energy

Briefly, because none of it changes your bill this winter:

• Warm Home Discount continues at £150 for eligible households on means-tested benefits — see our help paying your energy bills guide.
• An energy debt strategy, including a one-off targeted debt relief scheme for eligible households who re-engage with their supplier. Ofgem will consult on the design “shortly”; nothing to apply for yet. If you’re in arrears now, the help that already exists — affordable repayment plans and supplier hardship funds — is live today.
• A long-term target to bring UK energy costs in line with Europe within ten years, and a new public body, Great British Grid, for network infrastructure. Important, slow.

Frequently asked questions

Who gets the £100 Household Energy Payment?

Households in England who live in, and are liable for council tax on, a band A–D property as their main home — up to 20 million households. Second homes, empty properties and people not responsible for the council tax are excluded. Scotland, Wales and Northern Ireland receive a share of the funding and will decide their own support.

When is it paid, and do I need to apply?

From January 2027. Direct debit payers get it straight into their bank account with nothing to do. Everyone else will be invited to apply by their council. Only your council should contact you about it.

Will my gas bill go up when standing charges are scrapped?

It depends on your usage. The £108-a-year fixed charge moves into the unit rate — around 1p per kWh on current numbers. Below roughly 10,800 kWh a year you save; above it you pay more. Ofgem hasn’t fixed the exact uplift, and the change isn’t due until the end of 2027 at the earliest.

How much does the electricity VAT cut save me?

Five per cent of your electricity cost. For a typical 2,500 kWh home that’s about £43 a year at current capped rates, or around £32 across the nine months from 1 October 2026 to July 2027. It’s applied automatically.

I’m in band E or above — is there anything for me?

Not the £100. English councils share a £100 million discretionary fund for households outside bands A–D who are struggling with energy bills; each council will publish its own rules. The VAT cut applies to everyone in Great Britain.

Does this apply in Scotland, Wales and Northern Ireland?

The VAT cut and the standing-charge change cover Great Britain, so Scotland and Wales are included. The £100 payment is England-only, with devolved governments funded to design their own schemes. Northern Ireland has a separate energy market; electricity VAT stays at 5% there for now, with comparable relief expected from April 2027.

Just so you know: this guide is information and journalism, not financial advice, and we don't recommend specific financial products. Your circumstances are your own — if you need personal advice, speak to a suitably qualified adviser. Information was correct at the "last updated" date above but things change; always check the linked primary sources.

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