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Sunak considers VAT cut on household energy bills

Chancellor Rishi Sunak is reportedly considering a cut to the current 5% VAT rate on household energy bills in response to a looming cost of living crisis, reports suggest.

Government officials briefed on this month's Autumn Budget said Sunak had looked at reducing household energy VAT, but that no decisions had been taken according to the Financial Times.

The Treasury declined to comment on the issue, serving only to increase speculation.

As EU rules stipulated that member states could not cut VAT on domestic energy below 5%, the move would allow the Government to deliver a so-called ‘Brexit dividend'.

Sunak will be conflicted with making tax cuts right now, however, as he readies himself for an Autumn Budget that is likely to be dedicated to reducing the Government's spending deficit.

A move on VAT would also come into conflict with the upcoming UN climate change conference due to take place in Glasgow at the end of October 2021.

The Chancellor will announce his Autumn Budget on 27 October 2021.

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