UK energy price cap to increase by 4% from October, VAT on household electricity bills to be removed

(1) The UK Office of Gas and Electricity Markets (Ofgem) announced that, starting from October 2026, the annual energy price cap for a typical household (dual fuel, direct debit payment) will be raised by 4% to £1,723, which is an increase of approximately £5 per month compared to the current level. (2) The ongoing Middle East conflict, which continues to push up international wholesale natural gas prices, is the main driver behind this cap increase. (3) The UK government and Ofgem have simultaneously decided to remove VAT from all household electricity bills, and the relevant exemption will be automatically applied to users paying at the standard rate. Previously, Ofgem announced that the current price cap for an average household is £1,663 (including tax).