Two changes land on energy bills today. The Ofgem price cap for 1 October to 31 December 2026 takes effect at £1,723 a year for a typical dual-fuel household paying by Direct Debit, up 3.6%. And VAT on domestic electricity falls from 5% to 0%, where it stays until 31 March 2027.
Gas drove the rise. The VAT cut softens the electricity side, and Ofgem says the cap would have gone up by about 6% without it.
The new capped rates
These are national averages for Direct Debit customers. Your region will differ slightly.
Prepayment customers pay a typical £1,678 a year, and those paying on receipt of a bill pay £1,861. The full breakdown is in our October 2026 price cap guide.
What you need to do
Nothing, for either change. Both apply automatically. VAT is a tax on the supply, not part of the tariff, so customers on a fixed tariff get the 0% rate too, even though the cap itself doesn't move their unit rates.
One thing is worth doing: take a meter reading today and submit it to your supplier. Without it, your supplier estimates how much you used before and after 1 October, and that decides how much of your bill falls under the old rates and old VAT. A smart meter that sends readings does this for you.
How much is the VAT cut worth?
The government puts it at about £45 a year for a typical household. Martin Lewis points out that the same-day cap rise eats into much of that, putting the net benefit nearer £20. Our electricity VAT cut guide explains who gains most and what happens when it ends.
What happens next
October's cap only lasts three months. January is forecast to rise sharply: we're using about £2,060 (+20%) as the middle figure. Cornwall Insight forecast £1,999 (+16%) on 30 September, and supplier forecasts sit between £2,065 and £2,115. Ofgem confirms the real figure by 25 November. Our report on the latest January forecasts has the detail.
If you're weighing up a fix before then, Flexible Octopus has no exit fee, and Octopus 12M Fixed charges £50 per fuel to leave early. Our guide to fixing or staying variable runs the numbers, and the savings calculator shows what the new rates mean for your usage.
Sources: Ofgem — changes to the price cap, 1 October to 31 December 2026 and Ofgem — energy price cap. Figures last checked 1 October 2026.
The full explainer on this subject: October 2026 price cap guide. More updates on our energy news page.