Budget 2026 Energy Changes for Solar Homes

Chancellor John Healey delivered the first Budget since Andy Burnham became prime minister on 28 October 2026, and the energy measures are mostly about bills rather than home upgrades. There is a £100 payment for 20 million households, the VAT cut on electricity is extended, and gas standing charges are being scrapped. Here is each change as reported by BBC News, what it means if you have solar panels, a battery or a heat pump, and what the coverage did not mention.

The £100 household energy payment

20 million households in council tax bands A to D in England will get a £100 “household energy payment” this winter, paid directly into their bank accounts. Healey costed the scheme at £2.6bn and said funding will go to the Scottish, Welsh and Northern Ireland governments so they can do the same.

It is a one-off payment, not a change to the price cap, and it does not depend on how much energy you use or whether you generate your own. BBC News reported that the government's council tax band checker was struggling under demand after the announcement; your band is also printed on your annual council tax bill. The BBC did not report when in the winter the payments will arrive.

The payment is paid for by a higher bank surcharge. Healey said banks will pay an extra 3 percentage points on the surcharge, taking it from 3% to 6%, for 15 months from January 2027, to fund “immediate support on energy bills”.

VAT on electricity stays at 0% until July

The cut in VAT on household electricity, from 5% to 0%, is extended to July 2027. It had been due to end in March 2027, and BBC News noted there had been speculation it would be made permanent. It was not. Healey said the extension takes £50 off the annual price cap.

The zero rate began on 1 October 2026; our explainer on VAT on electricity bills covers what it does and does not change, including for solar owners. Because it applies to the electricity you buy from the grid, it still matters if you have panels and a battery but import power in winter. For how the bill rate interacts with the cap, see the energy price cap explained.

Gas standing charges to be removed

Standing charges, the fixed daily fee, are to be removed from household gas bills “from next year”, with the cost added to the unit rate instead. This was announced on the morning of the Budget, and Healey said the government will set out “similar reforms to follow” for electricity.

Because the cost moves rather than disappears, not everyone gains. Paul Johnson, the former head of the Institute for Fiscal Studies, told BBC News the change will result in “some people gaining and some people losing”. BBC economics editor Faisal Islam described it as a redistribution from high users to low users that costs the Exchequer nothing, and as an incentive to shift from gas to electricity for heating and cooking. Low-usage households tend to gain, and heavy gas users tend to lose.

For anyone weighing a heat pump, that shift is the relevant part. A cheaper fixed charge and a dearer gas unit rate narrows the running-cost gap with a boiler, though the size of the effect depends on how much moves into the unit rate, and that detail was not given. Our heat pump vs gas boiler comparison and heat pump running costs guide use current prices and will need revisiting once Ofgem sets the new structure.

Kerosene import taxes removed

BBC News's key points list import taxes being removed on more than 100 food products as well as kerosene and fertilisers. For homes off the gas grid heating with oil, that is a possible small saving on heating oil, although the BBC coverage gave no figures and the Boiler Upgrade Scheme top-up for oil and LPG homes is covered separately in our heat pump grant guide.

What the Budget coverage did not mention

We found no announcement about solar panels, batteries, heat pump grants or the Boiler Upgrade Scheme in BBC News's Budget coverage. That includes its key-points summary and its live coverage of the speech. Treat the grant as unchanged until the Treasury's full Budget documents or GOV.UK say otherwise.

The same goes for the 0% VAT rate on solar panels and batteries. The BBC's coverage said nothing about it, and HMRC's notice still has it reverting to 5% from 1 April 2027; see VAT on solar panels rises to 5% in April 2027. Do not confuse that with the electricity bill VAT cut above, which is a separate measure.

What it means for solar, battery and heat pump owners

• Solar and battery owners: the electricity VAT cut and the £100 payment apply to everyone eligible regardless of generation. They do not change what you earn from exports.
• Heat pump owners and buyers: the gas standing charge change is the one to watch, as it affects the comparison with gas. No grant change was reported.
• Anyone planning an install: nothing in the coverage moves the 31 March 2027 VAT deadline, so the timing advice in our VAT guide still stands.

We will update this page when the Treasury documents and Ofgem set out the detail on standing charges and the payment timetable.