Millions of households will receive £100 towards their energy bills under new measures announced in the 2026 Budget, as the government attempts to ease the cost of living this winter.
Chancellor John Healey has also extended a temporary VAT cut on electricity bills and confirmed plans to scrap gas standing charges, potentially saving some consumers around £45 a year.
But not everyone will benefit equally. Here's what the announcements mean for families, couples and people living alone – and a breakdown of who qualifies for financial support.
What does the 2026 Budget mean for energy bills?
The biggest immediate announcement is a new £100 Household Energy Payment for up to 20 million households living in properties in council tax bands A to D.
The payment will be made directly into eligible households' bank accounts to help with winter energy costs. However, the government has not yet confirmed exactly when payments will arrive or whether consumers will need to apply.
The Chancellor also announced an extension to the temporary removal of VAT from domestic electricity bills until July 2027. Introduced on 1 October, the measure applies to households on fixed and variable tariffs, with the government estimating it will reduce the annual energy price cap by around £50 compared with what it would otherwise have been.
However, this isn’t a separate £50 payment, and actual savings will depend on your electricity consumption.
The government also plans to abolish gas standing charges for around 23 million households in 2027, or as soon as possible afterwards.
Standing charges are fixed daily fees paid regardless of your consumption. Under Ofgem's current energy price cap, the average gas standing charge is 29.68p a day, or approximately £108 annually.
The costs will instead be transferred into gas unit rates. The Treasury estimates that 60 per cent of gas account holders could save an average of £45 a year, while higher users may pay more.
Electricity standing charges are not being abolished.
The announcements come after Ofgem's price cap rose by 4 per cent in October, taking the typical annual dual-fuel bill to £1,723.
What do the Budget changes mean for families, couples and people living alone?
Families
Families living in council tax band A to D properties should qualify for the new £100 Household Energy Payment, regardless of the number of children or adults living in the home.
Larger families could also benefit from the electricity VAT extension, particularly where electricity consumption is high.
However, families that use a lot of gas may benefit less from this change. That's because the government plans to recover the cost of removing standing charges by increasing gas unit rates. So households with higher consumption could therefore see smaller savings or even end up paying more.
There is also additional support available for eligible low-income families through the £150 Warm Home Discount, which is expected to reach around six million households this winter.
Families receiving qualifying benefits may also be entitled to Cold Weather Payments during prolonged periods of freezing temperatures.
Couples
Couples living in council tax bands A to D will also be eligible for the £100 payment, based on the property's classification rather than the number of occupants.
For those with relatively modest gas consumption, removing standing charges could make bills cheaper. However, couples using more gas may also see smaller savings once higher unit rates are introduced.
Older couples may also qualify for Winter Fuel Payments worth between £100 and £300, depending on their circumstances.
In England and Wales, these are generally paid automatically, although HMRC recovers payments from individuals with annual incomes above £35,000. Scotland operates a separate Pension Age Winter Heating Payment.
Couples receiving qualifying means-tested benefits may also be eligible for the Warm Home Discount.
Single occupants
People living alone could benefit proportionally more from abolishing gas standing charges, as fixed daily fees currently account for a larger share of bills in low-consumption households. However, as always, savings aren't guaranteed and will depend on one’s individual energy use.
Single occupants living in council tax bands A to D should also qualify for the £100 Household Energy Payment, just like larger households.
Eligible single pensioners may receive winter heating support, while those claiming qualifying means-tested benefits could receive the £150 Warm Home Discount.
It's worth remembering that Ofgem's £1,723 annual price cap figure is based on typical consumption, not a fixed bill, so people living alone may use considerably less energy and therefore pay less.
How to save on your energy bill
Regardless of the size of your home, there are several ways to reduce your energy costs this winter.
Check which discounts you're entitled to. The £150 Warm Home Discount is available to eligible households receiving certain means-tested benefits. Most qualifying customers in England and Wales receive it automatically, although some must provide additional information.
Compare energy tariffs. Ofgem's price cap limits unit rates and standing charges on standard variable tariffs, not total bills. Comparing fixed tariffs could reveal cheaper deals, although you should check both unit rates and standing charges.
Turn down your thermostat. Reducing your thermostat setting by 1C can cut heating consumption, provided your home remains comfortably and safely warm. Using heating controls effectively can also prevent wasted energy.
Reduce hot-water consumption. Shorter showers and avoiding unnecessary hot-water use can lower bills, particularly in larger homes.
Use your appliances efficiently. Washing clothes at 30C, running full loads and limiting tumble-dryer use can help reduce electricity consumption.
For more ideas, read our guide to simple ways to save energy at home.
Homeowners considering longer-term improvements can also explore the government's new Warm Homes Loan Scheme, which offers access to subsidised finance for measures including solar panels, batteries and heat pumps.
Households struggling with payments should contact their energy supplier, which may offer repayment plans or hardship support.
While the Budget provides some short-term relief, the impact on your individual energy bills will ultimately depend on your eligibility, your energy consumption and future energy prices.
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