Energy bills are set to rise for many households on standard variable tariffs from 1 October 2026, even though VAT is being removed from domestic electricity bills.
Ofgem’s new price cap is £1,723 a year for a household using a typical amount of gas and electricity and paying by Direct Debit.
Your own bill will depend on how much energy you use.
The headline figure is £60 a year, or roughly £5 a month, higher than the current £1,663 cap if the new rates lasted a full year.
The October cap actually runs from 1 October to 31 December 2026, and a Direct Debit payment does not automatically rise by £5. Ofgem announced the change on 26 August.
What changes on 1 October?
For a household on a standard variable tariff paying by Direct Debit, these are Ofgem’s average rates across England, Scotland and Wales. Your rates can differ by area and payment method.
| Charge | Until 30 September | From 1 October |
|---|---|---|
| Electricity per kilowatt hour | 26.11p | 26.32p |
| Electricity daily standing charge | 57.19p | 54.83p |
| Gas per kilowatt hour | 7.33p | 7.97p |
| Gas daily standing charge | 29.04p | 29.68p |
A kilowatt hour (kWh) is a unit of energy. A standing charge is the amount you pay each day to stay connected, even if you use no energy.
Ofgem publishes the rates and standing charges, including details for prepayment meters and people who pay when a bill arrives.
Why are bills rising if VAT on electricity is being removed?
The government is removing the 5% VAT on domestic electricity from 1 October 2026 to 31 March 2027. It expects the change to take around £45 off the annual price cap compared with leaving VAT in place.
VAT on gas remains at 5%. The government says suppliers should pass the electricity saving on to customers, including people on fixed deals.
But the cost of buying gas has risen. Ofgem says gas bills account for most of the increase in the October cap; for a typical household, gas costs rise by around 8%, while electricity bills stay broadly steady.
A home that does not use gas should see a much smaller increase under the cap, of less than 1%. The VAT cut reduces the rise but does not cancel it out. Ofgem explains the breakdown.
Here’s what that looks like in pounds. For a household using Ofgem’s typical amount of gas and electricity, the new average rates would add about £63 to gas costs and take about £3 off electricity costs if they lasted a full year.
That leaves a rise of roughly £60 overall. It’s a comparison of the rates, not an extra £60 charge between October and December. Your own change will depend on how much energy you use and where you live.
You may also see an older July figure of £1,862. Ofgem changed its estimate of what a typical household uses, so comparing that old headline number directly with October’s £1,723 would give the wrong impression.
Using the same newer estimate, the comparison is £1,663 to £1,723.
Will it affect your household?
The cap limits the price per unit and the standing charge on a standard variable or default tariff. It does not mean your total bill cannot go above £1,723.
Use more energy and you can pay more; use less and you can pay less. Around 22 million households are covered, according to Ofgem.
If you have a fixed energy deal, your agreed rates are not raised by this cap change. You should still benefit from the electricity VAT removal, which suppliers are expected to apply automatically.
If you use a prepayment meter or pay after receiving a bill, check the rates for your payment method rather than assuming the Direct Debit figures above apply to you.
The Ofgem cap covers England, Scotland and Wales; energy pricing in Northern Ireland works differently.
Four useful checks before 1 October
- Find your tariff. Your latest bill or supplier app should say whether you are on a standard variable tariff or a fixed deal. Look at the price per unit and daily standing charge, not just the monthly Direct Debit.
- Take meter readings on 30 September if you can. Submit them to your supplier, or check that your smart meter is sending readings. This helps split what you used before and after the new rates start.
- Compare deals using your own usage. Some fixed deals may cost less than the October cap for typical use, but check both fuels, standing charges, contract length and any exit fee. A lower quoted monthly payment alone does not prove a deal is cheaper.
- Check help with bills. The Warm Home Discount is a one-off £150 reduction for eligible households and reopens in October 2026. Many people receive it automatically, though some people in Scotland may need to apply through their supplier.
If you are struggling, contact your energy supplier now and ask about an affordable payment plan or hardship support. For more steps, see our guide to getting help when you can’t pay your bills.
If you’re worried about keeping warm this winter, see our guide to free support and ways to stay warm.
The practical first step is to check your tariff and meter reading. That will tell you much more about your own October bill than the £1,723 headline on its own.
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