VAT reduction on electricity extended

Extension announced by UK Chancellor in Budget 

The temporary VAT reduction on domestic electricity bills will be extended by a further three months.

The move follows the UK Autumn Statement which was delivered today (28 October) by Chancellor John Healey.

It means the VAT rate on domestic electricity supplies will remain at zero percent until 30 June 2027.

The VAT reduction was originally introduced on 1 October 2026 and was due to expire on 31 March 2027. 

Isle of Man Treasury Minister Michael Crowe said the department is examining the measures announced by the UK Government to assess any implications for the Island.

He said: “Treasury is reviewing the measures announced today by the UK Government to understand where there may be implications for the Isle of Man. 

"As we look towards the Isle of Man Budget in February 2027 our priority is to strike the right balance between supporting people and businesses today and maintaining strong, sustainable public finances for the years ahead.”

The extension forms part of a wider package of measures mirrored under the Island's arrangements with the UK.

Under the Customs and Excise Agreement the Isle of Man will also continue applying the 5p-per-litre reduction in fuel duty until 30 June 2027.

In addition a reduced rate of duty on red diesel, which was introduced on 15 June and due to end this year, has also been extended through to 30 June 2027.

The Isle of Man's Budget will be revealed in Tynwald's February 2027 sitting.