HMRC has reversed its stance on UK VAT grouping, allowing overseas establishments of UK VAT groups to be treated as part of the group even in EU member states that do not allow whole entity VAT grouping. The change, announced on 19 January 2026, follows a November 2025 brief that also invites businesses to reclaim overpaid VAT. The shift aims to simplify cross‑border compliance and attract foreign investment, while expanding revenue‑protection rules.
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Energy Digital · about 8 hours ago
UK: New Prime Minister Andy Burnham will cut VAT on electricity bills from the start of October, exempting households in England, Scotland and Wales for six months. The measure will reduce average household bills by about £45 and cost the Treasury roughly £850m this financial year.
TaxResearch · 1 day ago
The UK will remove VAT from electricity bills from October, cutting average annual bills by about £45 per household. The move is expected to reduce tax revenue by roughly £1.1 billion, but critics argue it does not address underlying grid capacity issues.
Guardian · 1 day ago
The UK government will remove VAT from electricity bills for households in Great Britain from 1 October 2026, reducing the annual price cap by £45. Northern Ireland will retain the 5% VAT rate, and the cut does not apply to gas.
VatCalc · 1 day ago
The United Kingdom has announced that domestic electricity bills will be zero-rated from 1 October 2026, reducing the VAT rate from 5% to 0%. The measure is temporary, applying until 31 March 2027, and will be funded by cancelling the planned Digital ID programme.
The Independent · 2 days ago
The UK government will remove VAT from domestic electricity bills from 1 October 2026, cutting the rate from 5% to 0%. The change is expected to save households around £45 a year and will be funded by cancelling the Digital ID programme.
The Independent · 2 days ago
In the UK, the government announced an £850 million tax cut on energy bills, making electricity bills VAT free from 1 October 2026 in England, Scotland and Wales. Northern Ireland remains exempt because EU VAT rates apply under the Windsor Framework, preventing the cut from applying there.
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Key Takeaways
From 19 January 2026, HMRC announced that overseas establishments of businesses VAT grouped in the UK should be treated as part of that VAT group even when located in an EU member state that does not operate whole entity VAT grouping.
In November 2025, HMRC’s Revenue and Customs Brief 7 invited businesses that had accounted for VAT under previous guidance to submit error correction notices to reclaim overpaid VAT.
Sections 43, 43A, and 43B of the Value Added Tax Act 1994 govern UK VAT grouping, allowing two or more eligible persons to be treated as a single taxable person for VAT purposes.
Primary source
Read the full article at Stewart's LawThis summary was published on VATfaqs.com on 20 January 2026. It relates to VAT developments in United Kingdom. The original source is Stewart's Law.
