Electricity bills will have VAT removed from 1 October, saving households around £45 a year, new Prime Minister Andy Burnham announced this morning. The government hopes that the tax cut will impact the next energy price cap, which will change on 1 October. VAT on electricity bills is currently 5% and will be cut to 0%. VAT is currently charged on both fuels and will be removed from electricity only, saving a typical household around £3.75 a month on electricity (based on the government's £45 saving). Find out what the energy price cap is, including the exact rates per day and per kilowatt hour of power.