Gas standing charges scrapped: Will your bills fall?

**** Breaking Budget 2026 update: Electricity bill VAT cut extended until July 2027

Updated 28 October 2026: Chancellor John Healey has announced further help with energy bills in today's Autumn Budget, confirming that the temporary removal of VAT from domestic electricity bills will continue until July 2027.

The Chancellor says the extended relief will take around £50 off the annualised energy price cap, compared with what households would otherwise have paid.

The VAT cut was originally introduced in October 2026 and had been due to finish on 31 March 2027, meaning households will now benefit for longer.

Importantly, this doesn't mean everyone will receive £50 back or see their next bill fall by that amount. The figure represents an annualised saving, and the amount you personally save will depend on your electricity use and tariff.

The Chancellor also announced plans to prevent additional clean-energy policy costs being automatically added to household bills, alongside longer-term reforms to the energy market.

These measures are separate from the Government's announcement that gas standing charges will be removed from 2027 or as soon as possible afterwards.

For households already worried about winter energy costs, the important distinction is when the help arrives. The electricity VAT relief is already in place, while the gas standing-charge reform won't take effect until at least next year.

And with wholesale energy prices continuing to put pressure on household bills, neither announcement guarantees that your total energy costs will fall.

Millions of households could see their gas bills fall after the The Government has announced plans to scrap gas standing charges for around 23 million homes from 2027, potentially saving 60% of households an average of £45 a year. But the costs will move onto gas unit prices, meaning some households could actually pay more. Here's what the changes mean, who's likely to benefit and what other energy support could be announced in the Autumn Budget.Government announced plans to scrap standing charges, but before you start celebrating the disappearance of another household bill, there's a catch. The cost isn't going away entirely, and some households could actually end up paying more.

Chancellor John Healey has confirmed that standing charges will be removed from household gas bills for around 23 million homes, with the changes expected in 2027 or as soon as possible afterwards.

The Government estimates that around 60% of households could save an average of £45 a year, equivalent to £3.75 a month, although how much you save will depend on how much gas you use.

The announcement comes ahead of today's Autumn Budget, with further help for households struggling with energy costs also reportedly being considered.

So, what's actually changing, and could you end up better or worse off?

What are gas standing charges and why are they being scrapped?

If you've ever looked at your energy bill and wondered why you're paying money before you've even switched the heating on, you've met the standing charge.

It's a fixed daily fee you pay for being connected to the gas network, regardless of how much gas you actually use.

Under the current energy price cap, the average gas standing charge is 29.68p a day for households paying by Direct Debit, which adds up to around £108 a year.

That means you could turn your heating off, spend a fortnight away from home or barely touch your gas supply over summer and still be charged for every day.

The Government argues that removing standing charges will make bills more closely reflect the amount of gas households actually use, giving people more control over their spending.

But it's important to understand that scrapping the standing charge doesn't mean scrapping the costs it currently pays for.

Instead, those costs will be moved onto the price you pay for each unit of gas.

Will removing gas standing charges make energy bills cheaper?

For many households, yes. But unfortunately not for everyone.

The Government estimates that around six in ten households could save an average of £45 a year under the changes.

That's welcome news if you're already trying to squeeze every possible saving out of your household budget, but it's worth putting that £45 into perspective.

Spread across a year, it works out at just £3.75 a month, and the amount you personally save could be higher, lower or nothing at all.

The reason is fairly simple. At the moment, everybody pays a fixed daily standing charge and then pays for the gas they use.

Under the proposed system, that fixed charge disappears, but the unit price of gas rises to cover the costs previously collected through standing charges.

So the less gas you use, the more likely you are to benefit, while households using larger amounts could see their bills increase.

Could gas actually become more expensive?

Yes, the price per unit of gas is expected to rise.

MoneySavingExpert estimates that moving standing-charge costs onto the unit rate could increase the average price of gas from 7.97p to approximately 9.11p per kilowatt hour, based on current prices.

That means households using more gas will pay more through their usage, potentially cancelling out the saving from losing the standing charge.

For example, a household that uses very little gas might see a meaningful reduction in its annual bill, while a family heating a larger or poorly insulated property could find themselves paying more overall.

These figures are estimates rather than confirmed future tariffs, and the exact impact will depend on how the changes are implemented.

For people already keeping the thermostat low to save money, the reform could provide more control. But for households that need to use more energy, whether because of their property's condition, family circumstances or health needs, cutting consumption isn't always a realistic option.

The Government says it will announce additional protections for a small number of households that could be adversely affected.

When will gas standing charges be abolished?

The changes aren't happening immediately. The Government has asked energy regulator Ofgem to remove gas standing charges in 2027 or as soon as possible afterwards.

The exact start date hasn't been confirmed, so households will continue paying gas standing charges under their existing tariffs for now.

It's also not yet clear exactly how the changes will work across fixed deals, variable tariffs and different payment methods, including prepayment meters.

The announcement applies to the energy system in England, Scotland and Wales. Northern Ireland has different energy arrangements, and the impact there has yet to be clarified.

Are electricity standing charges being scrapped too?

No. The announcement only covers gas standing charges.

Electricity standing charges will remain in place for now, although the Government has indicated that further details about electricity standing-charge reform will follow in 2027.

This is an important distinction because electricity standing charges make up a substantial part of many households' fixed energy costs.

Under the current October to December 2026 price cap, the average electricity standing charge for a Direct Debit customer is 54.83p a day, or around £200 a year.

So even when gas standing charges disappear, households using both gas and electricity will still have a daily fixed charge on their electricity bill unless further reforms are introduced.

What other energy bill help could be announced in the Autumn Budget?

With millions of households heading into another expensive winter, energy affordability is expected to be one of the main themes of Chancellor John Healey's first Autumn Budget.

Reports suggest the Government is considering additional targeted help for households struggling with energy costs, potentially funded through increased taxes on banks and other industries.

However, the details have not yet been confirmed, including who might qualify, how much help could be available and whether any support would arrive automatically.

One measure already in place is the removal of VAT from domestic electricity bills from October 2026, which the Government estimates will save a typical household around £45 a year compared with what it otherwise would have paid.

The standing-charge reform is separate from that measure, and it shouldn't be assumed that every household will save £90 across the two changes.

It's also important to remember that energy prices can still rise even when the Government announces measures intended to reduce bills.

Are energy bills going up in January 2027?

The latest Ofgem energy price cap, covering October to December 2026, is £1,723 a year for a typical dual-fuel household paying by Direct Debit.

That's 4% higher than the previous cap.

Some forecasts have suggested that the January 2027 cap could rise significantly, potentially taking the typical annualised bill above £2,000.

That is a forecast, not a confirmed price. Ofgem has not yet announced the January cap.

It's also worth remembering that the energy price cap isn't a maximum amount you can spend. It limits the unit rates and standing charges for affected tariffs, so the more energy you use, the more you'll generally pay.

Any further Government support will need to be considered alongside those changing prices to understand what happens to household bills overall.

What can you do to keep your energy bills down now?

The standing-charge change won't arrive until at least 2027, so there's no need to change your energy tariff purely because of today's announcement.

There are, however, a few things worth checking if you're worried about the cost of heating your home this winter.

• Check whether you're on a competitive tariff. A fixed energy deal may offer better value than your current variable rate, although you'll need to compare the full annual cost, including unit prices, standing charges and any exit fees.

• Make sure you're receiving support you're entitled to. Check the eligibility rules for schemes such as the Warm Home Discount and any help offered by your energy supplier.

• Check your meter readings and estimated bills. If your supplier is billing you based on estimates, make sure the readings reflect what you've actually used.

• Speak to your supplier early if you're struggling. Energy companies have obligations to consider your circumstances and work with you on affordable repayment arrangements.

• Look for ways to reduce heat loss before turning your heating down further. Simple measures such as draught-proofing can help, but nobody should feel pressured to keep their home at an unsafe temperature to save money.

If you're having difficulty paying your energy bills, you can also find guidance through MoneyWellness.

Is scrapping gas standing charges good news for households on tight budgets?

The announcement could make a difference for households that use relatively little gas, particularly those already taking steps to keep their energy use down.

Removing the fixed daily fee means those households could have greater control over how much they spend.

But there's a difference between making an energy bill more closely linked to usage and making energy genuinely affordable.

For a household struggling to heat a poorly insulated home, the ability to use less gas doesn't necessarily solve the problem, especially when using less might mean sacrificing comfort or warmth.

And while an average £45 annual saving is useful, it isn't a substitute for understanding the wider cost of running a home.

With energy prices still under pressure, the real test for household budgets will be how much people pay overall, rather than whether an individual charge has disappeared from their bill.

Gas standing charges: Your questions answered

Will everyone save £45 when gas standing charges are scrapped?

No. The Government estimates that around 60% of households could save an average of £45 annually. Some households may save more, others less, while higher gas users could see their costs increase.

Do I need to contact my energy supplier?

No action is required at present. The changes aren't expected until 2027 at the earliest, and the details of how they will be implemented haven't been confirmed.

Will my gas bill be free if I don't use any gas?

Removing standing charges should mean that more of your bill depends on actual consumption, but the precise future tariff rules haven't been finalised. You may still be responsible for any other applicable charges.

Will prepayment meter customers benefit?

The impact on prepayment customers has not yet been fully clarified. Further information is expected as Ofgem develops the changes.

Are electricity standing charges being abolished?

Not at this stage. The announcement only covers gas, with further information about electricity standing-charge reforms expected in 2027.

Will the changes help with this winter's energy bills?

Not directly. The standing-charge reform is scheduled for 2027 or later, so it won't remove fixed gas charges from bills this winter. Any additional support announced in the Autumn Budget would have its own eligibility requirements and timetable.