# How much of my energy bill is tax? url: https://whereyourmoneygoes.co.uk/tax-on-energy-bills/ updated: 22 September 2026 licence: CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/) publisher: Tekstak Ltd [Where your money goes](/) › Household energy # How much of my energy bill is tax? Last updated 22 September 2026. Figures refresh every night. [How each figure is worked out](/methodology/). Much less than on road fuel. Of a typical £1,663 annual dual-fuel bill, about **£165 is tax and policy levies** — 10% — made up of roughly £80 of VAT and £85 of policy costs that fund renewables support and schemes such as the Warm Home Discount. VAT on domestic gas is 5% and on electricity 0%, against 20% on most goods. The shares are Ofgem's own breakdown of the July to September 2026 price cap. Figure as of 22 September 2026. Source: [Ofgem](https://www.ofgem.gov.uk/your-energy-supply/your-energy-bill/energy-price-cap-unit-rates-and-standing-charges). ## What is in a typical energy bill? £1,663 Typical annual dual-fuel bill, July to September 2026 700 380 365 85 80 40 Wholesale energy 42%Networks 23%Operating, debt and industry 22%Policy costs 5%VAT 5%Supplier margin 2% **What a typical dual-fuel bill is made of, July to September 2026** **The numbers behind this chart** | Part of the bill | What it pays for | Per year | Share | | --- | --- | --- | --- | | Wholesale energy | The gas and electricity your supplier buys | £700 | 42% | | Networks | Pipes, cables, pylons, the grid operator keeping supply and demand balanced, and grid upgrades | £380 | 23% | | Operating, debt and industry | Billing, smart meters, bad debt, costs of failed suppliers | £365 | 22% | | Policy costs | Levies funding renewables support, the Warm Home Discount and similar schemes | £85 | 5% | | VAT | 5% on the total (gas and, until October, electricity) | £80 | 5% | | Supplier margin | Capped earnings allowance | £40 | 2.5% | Figure as of 22 September 2026. Source: [Ofgem](https://www.ofgem.gov.uk/your-energy-supply/your-energy-bill/energy-price-cap-unit-rates-and-standing-charges). Shares of the July-September 2026 cap. Pound figures are those shares applied to the total and rounded. In the October cap wholesale rises to about 47% and electricity VAT drops to zero. [Work out your own energy bill](https://howlongisit.co.uk) ## How much VAT is on gas and electricity? Domestic energy has carried reduced-rate VAT of 5% since the 1990s, against 20% on most goods. VAT on domestic electricity is zero from 1 October 2026 to 31 March 2027; gas stays at 5%. 5% VAT on domestic gas Figure as of 22 September 2026. Source: [Ofgem](https://www.ofgem.gov.uk/your-energy-supply/your-energy-bill/energy-price-cap-unit-rates-and-standing-charges). Checked by hand 22 September 2026. 0% VAT on domestic electricity Figure as of 22 September 2026. Source: [Ofgem](https://www.ofgem.gov.uk/your-energy-supply/your-energy-bill/energy-price-cap-unit-rates-and-standing-charges). Checked by hand 22 September 2026. £80 VAT on a typical bill, July to September 2026 Figure as of 22 September 2026. Source: [Ofgem](https://www.ofgem.gov.uk/your-energy-supply/your-energy-bill/energy-price-cap-unit-rates-and-standing-charges). Checked by hand 22 September 2026. £85 Policy levies on a typical bill Figure as of 22 September 2026. Source: [Ofgem](https://www.ofgem.gov.uk/your-energy-supply/your-energy-bill/energy-price-cap-unit-rates-and-standing-charges). Checked by hand 22 September 2026. ## What are the policy levies on my bill? For years, government schemes were paid for through bills rather than general taxation: support for renewable generators (the Renewables Obligation, Feed-in Tariffs and Contracts for Difference), the Energy Company Obligation insulation scheme, and the Warm Home Discount. Because a levy on a bill takes the same amount whether you are rich or poor, critics called them regressive. From April 2026 the Energy Company Obligation stopped being charged on bills, and 75% of the Renewables Obligation cost moved to the Treasury — together worth about £150 a year to a typical household. The cost has not disappeared: taxpayers now fund it instead of bill payers. Policy costs are now about 5% of a typical bill, down from around 15%. [What renewables support costs you](/renewables-levies/) sets out the three schemes and what each adds to a household bill. ## Why does electricity cost so much more than gas per unit? Electricity is 26.32p a kWh against 7.97p for gas — about 3.3 times as much. Two reasons. Most historic levies were loaded onto electricity rather than gas. And the wholesale electricity price is usually set by the last gas power station needed to meet demand, so electricity inherits the gas price plus the cost of carbon. Gas generators pay for their emissions through the UK Emissions Trading Scheme plus a UK-only top-up, and that cost is built into the wholesale electricity price everyone pays. [Why UK electricity is so expensive](/why-uk-electricity-is-expensive/) goes into this in full. ## Which part of the bill is rising fastest? With levies falling, the part now growing fastest is networks: grid expansion to connect new generation, and payments to wind farms to switch off when the grid cannot carry their power. Networks went from £397 to £463 of the cap between the first and second quarters of 2026. ## Every part of the bill | Part of the bill | What it pays for | Per year | | --- | --- | --- | | Wholesale energy | The gas and electricity your supplier buys | £700 | | Networks | Pipes, cables, pylons, the grid operator keeping supply and demand balanced, and grid upgrades | £380 | | Operating, debt and industry | Billing, smart meters, bad debt, costs of failed suppliers | £365 | | Policy costs | Levies funding renewables support, the Warm Home Discount and similar schemes | £85 | | VAT | 5% on the total (gas and, until October, electricity) | £80 | | Supplier margin | Capped earnings allowance | £40 | ## Common questions How much of a UK energy bill is tax? About £165 of a typical £1,663 annual dual-fuel bill, or 10%: £80 VAT and £85 policy levies.What is the VAT rate on energy bills? 5% on domestic gas and 0% on domestic electricity. VAT on domestic electricity is zero from 1 October 2026 to 31 March 2027; gas stays at 5%.What are green levies costing me? Policy costs are about £85 a year on a typical bill, roughly 5% of it, down from around 15% before the Energy Company Obligation and most of the Renewables Obligation moved to general taxation. ## Use this data Everything on this page is published under [CC BY 4.0](https://creativecommons.org/licenses/by/4.0/). You may republish it, including commercially, if you credit Tekstak Ltd and link back to this page. ### Download - [EU average household electricity price, semi-annual (CSV)](/data/eu-household-electricity.csv) [JSON](/data/eu-household-electricity.json) - [All data and field definitions](/data/) ### Embed the live figure Paste this into your page. It updates itself every night and links back here. Embed code ## Sources for this page | Source | Publisher | Figures as of | Updated | | --- | --- | --- | --- | | [Ofgem, energy price cap unit rates and standing charges](https://www.ofgem.gov.uk/your-energy-supply/your-energy-bill/energy-price-cap-unit-rates-and-standing-charges) | Ofgem | 22 September 2026 | quarterly | | [Electricity prices for household consumers (nrg_pc_204)](https://ec.europa.eu/eurostat/databrowser/view/nrg_pc_204/default/table) | Eurostat | 1 July 2025 | semiannual | ## Related questions - [What is the energy price cap, and what is it now?](/energy-price-cap/) - [What do renewables levies cost me?](/renewables-levies/) - [Why is UK electricity so expensive?](/why-uk-electricity-is-expensive/) - [How do UK electricity prices compare with other countries?](/uk-vs-world-electricity-prices/) ## Share this page - WhatsApp - X - Facebook - LinkedIn - Reddit - Email - ## Related pages - [What is the energy price cap, and what is it now?](https://whereyourmoneygoes.co.uk/energy-price-cap/) - [What do renewables levies cost me?](https://whereyourmoneygoes.co.uk/renewables-levies/) - [Why is UK electricity so expensive?](https://whereyourmoneygoes.co.uk/why-uk-electricity-is-expensive/) - [How do UK electricity prices compare with other countries?](https://whereyourmoneygoes.co.uk/uk-vs-world-electricity-prices/) ## More from this publisher - [UK tax calculators](https://howlongisit.co.uk) - [Work out your own figure with our UK tax calculators](https://howlongisit.co.uk) Published by Tekstak Ltd under CC BY 4.0. Figures last updated 22 September 2026.