UK Budget offers £100 energy payment and extends VAT cut on electricity bills

The UK Chancellor John Healey announced measures in his first Budget aimed at easing cost-of-living pressures, particularly related to rising energy costs, BBC reported.

From January, households in council tax bands A to D in England will receive a one-off £100 Household Energy Payment, funded by additional tax on banks. Equivalent funding will be provided to administrations in Scotland, Wales, and Northern Ireland, which will decide on similar payments.

Energy tariffs linked to the regulator Ofgem's price cap are expected to increase by hundreds of pounds annually, potentially pushing average bills to £2,000 or more starting in January. To help mitigate this, the VAT cut on electricity bills, initially introduced in October, will be extended until July, instead of ending in April as planned.

Additionally, gas standing charges, which are fixed daily fees, will be abolished in England, Scotland, and Wales during 2027 or as soon as possible thereafter, according to the Chancellor.

These measures aim to provide some financial relief to households facing higher energy costs amid rising prices.