The Treasury can confirm Isle of Man residents will benefit from a reduction in the VAT rate from 5% to 0% on domestic electricity supplies, announced today by the UK Government.
The change will come into effect on 1 October 2026 and will be made in line with the obligations under the Customs and Excise Agreement to maintain the same VAT rates as the United Kingdom.
This relief will extend to small businesses that qualify for domestic energy VAT relief and are not VAT registered, as well as eligible charities and residential care homes. Qualifying small businesses are those where electricity consumption is below an average of 1,000 kWh per month.
Manx Utilities will apply the revised VAT rate to eligible electricity supplies from 1 October 2026, implementing the change across the Isle of Man in line with the Customs and Excise Agreement, and the reduction will be reflected in customer bills.
Further details on the measure will be released in due course.
Current VAT rules on electricity can be found in HMRC Notice 701/19.
