Gas Standing Charge Scrapped Calculator

In the Budget on 28 October 2026, the Chancellor announced that the government “has asked Ofgem to abolish gas standing charges on domestic energy bills, aiming for delivery by the end of 2027 or as soon as possible after then”. It applies to homes in Great Britain. The money doesn't disappear: Ofgem will make sure suppliers “recover these costs through gas unit rates instead”.

The standing charge is the fixed daily amount you pay for having a gas supply, whether you use any gas or not. At the October 2026 price cap it is 29.68p a day, which is £108.33 a year including VAT. The Treasury's own figure is “£108 a year on average for the typical billpayer”. It pays for the gas network, metering and part of suppliers' running costs, and those costs stay. What changes is who pays them: instead of every home paying the same £108, each home will pay in proportion to the gas it burns.

The government says about 60% of account-holding households will save, by around £45 a year on average, across roughly 23 million homes. The other 40% or so will pay more. The Budget accepts that “a number of households may be less able to make the most of the reform” and promises “targeted mitigation”, with details still to come. Our full guide to gas standing charges being scrapped covers the policy in depth, and our Budget 2026 energy round-up covers the rest of the package, including the VAT extension and the £100 Household Energy Payment.

Every gas bill is two parts: days × standing charge plus kWh × unit rate. Abolition deletes the first part and makes the second part a little bigger. So the question for any household is simple: is the extra you'll pay on every unit more or less than the £108 you stop paying?

Your saving is the yearly standing charge minus your usage multiplied by the increase. At 5,000 kWh and a 0.94p increase that's £108.33 − (5,000 × £0.0094) = £108.33 − £47.00 = £61 a year better off. At 17,000 kWh it's £108.33 − £159.80 = £51 a year worse off. The break-even point is just the usage where those two numbers are equal, which is the standing charge divided by the increase.

Two consequences fall straight out of that. First, the most you can gain is the standing charge itself, about £108, and only if you use almost no gas. Second, there is no ceiling on what a big user can lose: the loss keeps growing with every kWh above break-even. That asymmetry is why the policy needs mitigation for high users even though most homes win.

All three estimates start from the same £108 standing charge. They differ on the one thing nobody knows yet: how many kWh the cost gets spread over. Spread £108 over more units and each unit carries less.

MSE's worked example (+1.14p) is the simplest version: take £108 and divide it by Ofgem's typical household's 9,500 kWh. That turns the 7.97p cap rate into 9.11p and puts break-even exactly at typical use. X and a cautious one, but it is probably on the high side, because the average gas home uses more than the typical home.

That sounds contradictory but it isn't. Ofgem's “typical” figure is close to a median: half of homes use less. A minority of large, draughty or busy homes use a great deal more, which pulls the mean up. Because suppliers must recover the total cost across total gas sold, the realistic spread is over something closer to that higher mean, which gives a smaller uplift. That is our reading of why the estimates differ, not something the publishers spelled out. Uswitch's 0.94p (7.97p to about 8.9p, break-even about 11,500 kWh) and Martin Lewis's “just under 1p” (we use 0.87p, matching his rough break-even of about 12,500 kWh) both reflect that. It's also why more than half of homes come out ahead: break-even sits above what most homes use.

Nesta, the innovation foundation, put it at 63% of dual-fuel households better off by about £27 a year, close to the government's 60%. In a Martin Lewis poll of around 52,000 people, 95% supported scrapping the charge.

Two caveats apply to all three. The uplift will be added to the cap as it stands when the change happens, and gas prices in 2027–28 could be very different from today's. And Ofgem might not recover every penny through a flat per-kWh addition. It could, for instance, treat prepayment or different regions differently. The calculator shows the range rather than pretending to know.

The heat pump case is worth dwelling on. Plenty of people who fit a heat pump keep their gas connection for a hob, and today that connection costs around £108 a year in standing charge for perhaps £50 of gas. That fixed cost has been one of the quiet arguments against keeping gas at all. After abolition, keeping a gas hob costs only the gas you cook with. If you're weighing up a heat pump, our heat pump guide covers the running costs.

There's a seasonal effect too. A standing charge is spread evenly across the year, so today your summer gas bill is mostly standing charge. Without it, summer bills fall close to zero and winter bills rise, because all the cost moves onto the units you burn in the cold months. If you pay a fixed monthly Direct Debit you won't notice much, but your supplier may adjust the amount when it reviews your account.

A household that's a loser today can become a winner by using less. Every kWh you save will be worth about 9p rather than 8p, so insulation, a smart thermostat and turning the flow temperature down on a combi boiler all pay back slightly faster. Our guide to saving money on energy lists the changes worth making first.

It isn't this winter. The aim is the end of 2027 or as soon as possible after. Ofgem has to design the change, consult on it and build it into the price cap methodology. Martin Lewis thinks it will most likely land with a cap update, either October 2027 or January 2028. For the whole of this winter and next year you'll keep paying a gas standing charge.

Existing fixed tariffs keep their standing charges for their full term, on Martin Lewis's reading of how the change works. The cap governs standard variable tariffs, so that's where it lands first. He expects suppliers to cut standing charges on non-capped tariffs as well once it does, because a fix with a £108 standing charge would look expensive to low users next to variable tariffs without one.

That creates a small wrinkle if you're choosing a fix now. An 18-month fix taken today runs to around spring 2028, so if abolition arrives in late 2027 you'd keep paying the standing charge for a few months longer than someone on a variable tariff. For a low user that's a few pounds a month of delayed saving; for a high user it's a few months of delayed loss. Either way it is small next to what fixing itself saves or costs, which is driven by the fix-or-variable decision and January's cap.

Only the gas standing charge is being abolished. On electricity, the Budget says the government is “committing to reform electricity standing charges and will set out details next year”. Reform could mean a lower charge, a different way of sharing network costs, or optional low-standing-charge tariffs. It does not mean abolition, and nothing changes yet.

The electricity standing charge is the bigger of the two: 54.83p a day at the October 2026 cap, about £200 a year, and it varies far more by region than gas does. Octopus's Flexible rate ranges from about 41p a day in London to about 67p in Merseyside and North Wales. See our Octopus prices by region tables for every region. Ofgem is also running a trial of low-standing-charge tariffs with Octopus, British Gas, E.ON and EDF, which started in June 2026. The standing charges guide explains what standing charges pay for and why they've grown.

For most homes the standing charge change is worth somewhere between £100 a year better off and £50 a year worse off, more than a year from now. The next price cap is much bigger and much closer. Ofgem announces the January–March 2027 cap by 25 November 2026, and forecasts put it at about £2,180 for a typical home, roughly 27% higher than October's £1,723. That's about £460 a year more, or around £38 a month, landing in the coldest quarter. Forecasts range from Cornwall Insight's £1,999 to British Gas's £2,185.

That's where switching and fixing decisions should come from. Octopus's 12-month fix averages about £1,948 a year for typical use and its 18-month fix about £1,888. Both cost more than today's cap and less than January's forecast. The 12-month fix roughly breaks even by the end of March and comes out ahead if prices stay high into spring. Leaving early costs £50 per fuel on the 12-month fix and £75 on the 18-month. Octopus reprices its fixes roughly weekly, so check the live rate.

If you'd rather stay variable, Flexible Octopus tracks the cap on unit rates but its gas standing charge is already below it: 28.72p a day on average across the 14 regions, about £104.83 a year, against the cap's 29.68p. It has no exit fees, so you can switch now and fix later. Greg Jackson, Octopus's founder, welcomed the Budget change and said most customers would see a cut to their gas bills. Run your whole bill, gas and electricity, through our energy savings calculator to see the difference for your usage.