UK Budget 2026 Energy Payment: £100 for 20 Million Households as Bank Surcharge Rises

Chancellor John Healey announced a £100 Household Energy Payment for about 20 million households in his first Budget on Wednesday 28 October 2026, funded in part by a temporary rise in the bank surcharge. The payment, worth £2.6 billion in total, will go to households in council tax bands A to D and will be paid directly into bank accounts. Healey presented the package as immediate help with energy bills through winter and spring, alongside longer-term changes to standing charges and VAT.

The energy measures sat at the centre of a Budget shaped by trade tensions, the war in Ukraine and the war in the Middle East, which Healey said were putting pressure on household budgets. The Chancellor said the measures would give families breathing space while the government kept borrowing under control. Reaction on Thursday 29 October 2026 focused less on the headline payment and more on who gains, who pays, and what has not yet been confirmed.

Budget 2026 energy payment — quick reference summary

What households actually receive this winter

The £100 payment is a one-off sum, not a monthly discount. Healey said it would be paid directly into bank accounts, so it does not depend on which energy supplier a household uses. That design matters for households that have switched supplier or pay by different methods, although the government has not yet published full delivery details for every case.

The payment sits alongside the existing £150 Warm Home Discount for eligible households on means-tested benefits, which is paid off electricity bills rather than as cash. Households should therefore not treat the £100 as a replacement for other support. Anyone struggling to pay should contact their supplier before falling behind and ask what support they qualify for, a step charities routinely recommend.

How banks pay for the energy support

Banks will pay an extra 3 percentage points on the bank surcharge, taking it to 6% above the 25% corporation tax rate. Healey said the increase was time-limited, starting in January and ending 15 months later, to pay for immediate support on energy bills. The Treasury framed the move as asking banks to help fund household relief at a time when energy costs remain high.

The surcharge rise is one of several revenue measures in the Budget, alongside higher taxes on banks and landlords highlighted in Thursday’s Budget coverage. Healey also pointed to gambling companies and other tax measures as sources of extra revenue, without abandoning the government’s fiscal targets. The full effect on bank lending and profits will only become clear in company results over the coming year, and is not publicly verified in detail yet.

Standing charges and VAT — the slower savings

From next year, standing charges will be removed from household gas bills through Ofgem, with similar reforms to follow for electricity. The charge usually costs the average household £108 a year. The Treasury estimates 60% of households will save an average of £45 a year, because fixed costs will instead be paid through the unit rate.

That shift helps low users most and means heavier users may pay more overall, a trade-off reported alongside the Budget. The electricity VAT cut, in force since 1 October, will now run to July, which Healey said would take £50 off the annual price cap. Together, the standing-charge reform and the VAT extension are designed to lower bills structurally, rather than through a single payment.

For context on how the Chancellor framed the wider Budget, see the related coverage of the UK vehicle production figures for September 2026 and the separate Budget decision on graduate visas for high-compliance universities. The energy package is the household-facing part of that same Budget, and its success will be judged on whether bills actually fall.

Who misses out and what is still unconfirmed

Households in council tax bands E and above are outside the £100 payment as announced, even if their energy costs are high. Funding will also reach the devolved governments of Scotland, Wales and Northern Ireland, and Healey urged them to introduce comparable support in their areas. How each devolved administration delivers that support is not publicly verified yet.

The exact date the £100 will be paid is also not publicly verified. Reports describe the payment as coming this winter, but the government has not confirmed a single payment date or whether any household needs to take action to receive it. Households should be wary of any text, call or email asking for bank details to claim the payment, since the announced design is a direct bank payment, not an application scheme.

Frequently asked questions

Who gets the £100 energy payment?

About 20 million households in council tax bands A to D, paid directly into bank accounts this winter. The scheme is worth £2.6 billion in total.

Do I need to apply for the £100 payment?

No application has been announced. Healey said the payment would be paid directly into bank accounts, but the exact payment date and delivery details for every case are not publicly verified yet.

What happens to gas standing charges?

Standing charges on household gas bills will be abolished from next year through Ofgem, with fixed costs moved to the unit rate. The Treasury estimates 60% of households will save an average of £45 a year.

Why are banks paying more tax?

The bank surcharge rises temporarily from 3% to 6% for 15 months from January, to help pay for immediate support on energy bills. Healey described the rise as time-limited.

Does the VAT cut on electricity continue?

Yes. The zero-rate VAT on domestic electricity, in force since 1 October, is extended to July. Healey said that would take £50 off the annual price cap.