0% VAT on electricity extended to the end of June 2027, and why the 31 March 2027 install deadline still matters

Is 0% VAT on electricity extended, and to what date?

Yes. The temporary zero rate on domestic electricity in Great Britain began on 1 October 2026 and was due to end on 31 March 2027. The Budget extends it by three months. The documents word the end date differently, so we say the end of June 2027 until the legislation fixes the day.

The Red Book's 1 July 2027 does not say whether that is the last day of 0% or the first day at 5%, so we follow the Budget overview and say the end of June 2027. Checked 28 October 2026.

Is the extension law yet?

No. The Budget overview says secondary legislation will be laid in early 2027, so until then the extension is an announcement. The scope, per the Policy costings, is all electricity supplies covered by the existing reduced rate, including household use, charities, residential accommodation and supplies to businesses below the de minimis threshold.

The current zero rate applies in Great Britain only, and HMRC says Northern Ireland stays at 5%. The Budget funds the Northern Ireland Executive for comparable support, with extended relief expected to apply in Northern Ireland from April 2027.

How much does 0% VAT on electricity save?

GOV.UK says the October 2026 price cap was £45 a year lower than it would have been without the VAT cut. For the extension, the Red Book says it is expected to take around £50 off the annual Ofgem price cap in April 2027. HM Treasury's footnote says that figure is its analysis of the average of published supplier cap forecasts, and that it depends on each household's electricity use. The Red Book says the measure supports around 29 million households.

The Budget documents give no effect on the cap for 1 January 2027, which Ofgem announces by 25 November 2026. Our price cap tracker carries the confirmed cap and the Budget notes.

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What happens to electricity VAT after June 2027?

Not stated. No Budget document says what applies to domestic electricity after the end of June 2027, and the extension itself still needs legislation.

Does the extension change 0% VAT on installing solar, batteries and heat pumps?

No, and this is the point most easily lost. They are separate reliefs. The installation relief, covered by HMRC's VAT Notice 708/6, was not extended: the Red Book lists the return to the reduced rate as planned (paragraph 6.215), and heat batteries are added to the 5% list from 1 April 2027. The electricity extension changes what you pay for your energy, not what you pay for the system that offsets it.

Sources: HM Treasury, Budget 2026 document (Red Book), paragraphs 3.4, 6.210 and 6.215; Overview of tax legislation and rates, paragraphs 2.20 and 2.22. Checked 28 October 2026.

Why does the 31 March 2027 install deadline still matter?

Because it is the only one of the two dates that you can act on. From 1 April 2027 the 5% rate applies to qualifying installations, and the step is from 0% to 5%, not to 20%. From 28 October 2026 to 31 March 2027 is 22 weeks. The runway a job needs, and what the deadline costs on Clearline's own package prices, are in our VAT deadline guide.

Round-number illustrations by Clearline, not quotes and not a forecast of any price.

One gap matters here. No Budget document says how the 5% rate treats a contract signed, or a deposit paid, before 1 April 2027 for work finished after it, and HMRC's VAT Notice 708/6 was last updated on 31 January 2024. Plan for completion by 31 March 2027, and get the VAT position in writing if your date is close. The full rules on what qualifies are in our 0% VAT on solar and batteries guide.

What does 0% VAT on electricity mean for solar and battery payback?

The capped electricity unit rate of 26.32p per kWh for 1 October to 31 December 2026 is quoted without VAT while the zero rate applies, so any payback sum built on it assumes 0%. As a labelled scenario, not a forecast: if 5% VAT applied to the same unit rate, each unit would cost 27.636p, which rounds to 27.64p, and 2,000 kWh of self-consumed generation would offset £552.72 instead of £526.40, a difference of £26.32 a year on the unrounded rate. We show it because no Budget document says what applies after June 2027.

The payback sum for your own roof depends on your usage and your tariff, so our January price cap guide and the guide to whether solar panels are worth it work through the method, and battery storage has current package prices.

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