Energy: Prices

(asked on 23rd February 2022) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment his Department has made of the potential impact of reducing VAT on energy bills on the consumer.


Answered by
Lucy Frazer Portrait
Lucy Frazer
Secretary of State for Culture, Media and Sport
This question was answered on 2nd March 2022

The Government already applies a reduced rate of VAT at 5 per cent on domestic fuel and power such as gas and electricity.

The Government is providing significant financial support of up to £350 to the majority of households, which will cover more than half of the forecast £700 rise in energy bills for the average household. This support is worth £9.1 billion in 2022-23. This is more generous than removing VAT on domestic fuel and power, which would not be targeted because it would also benefit high-income households that do not need support. There would also be no guarantee that suppliers would pass on the discounts to all customers.

While the Government keeps all taxes under review, there are no plans to remove VAT on domestic fuel and power.

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