Budget 2026: what it means for your energy costs

Today, the Chancellor delivered the Autumn Budget, setting out the Government’s tax and spending plans for the year ahead.

We’ve reviewed the Budget with business energy users in mind and picked out what we think will be most useful. Some measures begin immediately, while others will take time to come into effect.

At a glance

• Reforms to bring UK energy costs closer to European levels
• BICS backdated payments confirmed before the end of the year
• Planned gas shipper obligation scrapped
• Gas standing charges removed and electricity VAT cut extended, for households only

What’s changing?

BICS backdated payments confirmed

The Chancellor confirmed that backdated payments under the British Industrial Competitiveness Scheme (BICS) will be made before the end of the year. BICS will cut electricity bills by 25% for around 10,000 energy-intensive businesses, mainly manufacturers and their supply chains.

For more information on BICS and whether your business could be eligible, read our previous update here.

Gas shipper obligation scrapped

A planned scheme which would have seen a new levy apply to shippers has been scrapped. Associated costs would have been passed on through gas bills, so this removes a potential future increase for businesses.

Energy system reform

New clean energy projects will only be approved where they lower bills, and grid connections will be sped up.

Changes for households

Some of today’s headline energy announcements apply to household bills only and will not affect business energy customers:

• Gas standing charges will be removed for domestic customers from next year. The Chancellor also said he intends to do the same for electricity standing charges but made no firm commitment or timeline.
• The VAT cut on household electricity bills, which was due to end, has been extended until July 2027. This cut applies to eligible domestic and residential premises, charitable non-business use and low-usage sites.
• Households in council tax bands A-D will receive a £100 “household energy payment” this winter which will be paid directly into bank accounts.

Key dates

End of 2026: BICS backdated payments to eligible businesses.

Winter 2026: Qualifying households will receive their £100 payment.

2027: Standing charges to be removed for household gas bills.

July 2027: VAT cut on household electricity bills ends

What happens next?

Budget announcements can take time to reach energy bills, with more detail often following in the weeks and months after.

In the meantime, it’s worth reviewing your energy contract end dates and considering how these changes could affect your budget for the year ahead.