Budget 2026 household bills: the £100 Household Energy Payment and the fuel duty cut to July 2027
Budget 2026 announces a £100 Household Energy Payment from January 2027 for households in council tax bands A to D in England. Separately, the 5p-per-litre fuel duty cut on petrol and diesel is extended to 1 July 2027, when duty returns to its pre-2022 level and rises with RPI.
What happened
Budget 2026 announced a £2.6 billion Household Energy Payment: £100 for each household in council tax bands A to D in England, from January 2027. It also extended the temporary 5p-per-litre cut in fuel duty, which was due to end in January 2027, to 1 July 2027.
Budget 2026 announces a £2.6 billion Household Energy Payment. Households in council tax bands A to D in England will receive £100 from January 2027; HM Treasury says this covers up to 20 million households.
Status: Announced by the government
HM Treasury (GOV.UK) — Budget 2026 (HTML), 28 October 2026
Local authorities will deliver the payment through the council tax system. The Budget adds £100 million for councils in England to give targeted help to households hit hardest by energy bills, including some in bands above D.
HM Treasury (GOV.UK) — Budget 2026 (HTML), 28 October 2026
HM Treasury's estimate is that bands A to D hold around 80% of households in England. Devolved governments will get their share of the funding through the Barnett formula, so they can offer similar support.
HM Treasury (GOV.UK) — Budget 2026 (HTML), 28 October 2026
To help pay for it, the Bank Corporation Tax Surcharge rises from 3% to 6% between 1 January 2027 and 31 March 2028.
HM Treasury (GOV.UK) — Budget 2026 (HTML), 28 October 2026
The government is cancelling the plan to add 5p back onto fuel duty from January 2027, extending the temporary 5p-per-litre cut by six months to 1 July 2027, and deferring the planned RPI increase to the same date.
HM Treasury (GOV.UK) — Budget 2026 (HTML), 28 October 2026
HMRC's overview of tax legislation says the extension runs from 1 January 2027 until 30 June 2027. On 1 July 2027, fuel duty rates return to the levels that applied before the cut was introduced in March 2022 and are uprated in line with RPI.
HM Revenue & Customs (GOV.UK) — Budget 2026: overview of tax legislation and rates (OOTLAR), 28 October 2026
HMRC's Annex A rates table gives the fuel duty rate for unleaded petrol and for diesel as 0.5295 pounds per litre for 15 June 2026 to 30 June 2027, and 0.6059 pounds per litre from 1 July 2027.
HM Revenue & Customs (GOV.UK) — Budget 2026 OOTLAR Annex A: rates and allowances, 28 October 2026
The 3.7p-per-litre cut to red diesel duty is also extended to 1 July 2027. The Budget notes diesel exceeding £2 per litre in October 2026.
HM Treasury (GOV.UK) — Budget 2026 (HTML), 28 October 2026
Separately, the cut to VAT on domestic electricity is extended to July 2027. HM Treasury expects it to take around £50 off the annual Ofgem price cap in April 2027.
HM Treasury (GOV.UK) — Budget 2026 (HTML), 28 October 2026
What is established, and what is not
- These are announced measures, not yet in force.
- Households in council tax bands A to D in England will receive £100 from January 2027. Scotland, Wales and Northern Ireland are not covered by this payment; their devolved governments receive a share of the funding through the Barnett formula.
- The 5p-per-litre fuel duty cut, which applies across the UK, is extended to 1 July 2027, and the RPI increase is deferred to the same date.
- The VAT cut on domestic electricity is extended to July 2027.
- How the payment will reach each household: the Budget calls it a “council tax rebate” delivered by local authorities, and also a payment “directly into bank accounts”. UKCalc is waiting for delivery guidance.
- Whether households need to do anything to receive it, and which council tax band date is used to decide eligibility.
Nothing in the right-hand column is established. It is listed so that what is confirmed cannot be read as covering it.
What it means
The £100 is a one-off payment made through the council tax system, not a cut to energy prices. Councils also get £100 million for targeted help, which can reach some households in bands above D. On fuel, the duty rate on petrol and diesel stays where it is until 30 June 2027; from 1 July 2027 it returns to the pre-2022 level and is uprated with RPI. The extended VAT cut on electricity is covered in our separate article on what it saves.
Who is affected
- Households in England in council tax bands A to D
- Households in bands E to H in England struggling with energy bills, who may be helped by their local authority instead
- Drivers and businesses buying petrol or diesel
- Red diesel users such as farms and rail freight
- Households in Scotland, Wales and Northern Ireland: the £100 payment covers England; devolved governments receive a share of the funding
UKCalc's interpretation
The section below is UKCalc's analysis. It is separated from the facts above deliberately: it is arguable, and the facts are not.
The three measures work in different ways. The £100 is a one-off payment to the household, not a change to the price of gas or electricity. The VAT cut applies to electricity only, not gas. Fuel duty is a tax on road fuel such as petrol and diesel, not on household energy.
UKCalc's reading of the evidence above, not a statement by any source.
The duty rate on petrol and diesel does not change on 1 January 2027. The increase is moved to 1 July 2027, when the cut ends and RPI uprating is added at the same time.
UKCalc's reading of the evidence above, not a statement by any source.
What happens next
Councils are due to make the £100 payments from January 2027. The fuel duty extension takes effect from 1 January 2027 and ends on 30 June 2027, with the higher rate from 1 July 2027.
Questions this answers
- What is the Household Energy Payment?
- Who gets the £100 Household Energy Payment and when?
- Is the fuel duty cut being extended?
- When does fuel duty go up?
- Does the VAT cut apply to gas as well as electricity?
Sources
- HM Treasury (GOV.UK) — Budget 2026 (HTML) · 28 October 2026
- HM Revenue & Customs (GOV.UK) — Budget 2026: overview of tax legislation and rates (OOTLAR) · 28 October 2026
- HM Revenue & Customs (GOV.UK) — Budget 2026 OOTLAR Annex A: rates and allowances · 28 October 2026
Statutory figures belong to the body that publishes them. UKCalc compiles and verifies them, and any calculation built on top is UKCalc's own — see the governed rates reference.