Short answer: from 1 October to 31 December 2026, the Ofgem energy price cap for a typical household is £1,723 a year, 4% higher than in the summer. If you run a business from home as self-employed, you can claim part of these bills as an expense and reduce your tax.
How much energy costs from October
Ofgem has raised the price cap by £60 a year, which is around £5 a month for an average home paying by direct debit. The increase is driven mainly by gas - its wholesale cost is rising because of tensions in the Middle East. Electricity is cheaper than it might have been, because the government has removed VAT from household electricity bills.
Rates within the cap (England, Scotland, Wales, direct debit):
- electricity: 26.32p per kWh and a standing charge of 54.83p per day,
- gas: 7.97p per kWh and a standing charge of 29.68p per day.
The cap does not apply to people on fixed-price contracts - they pay according to their contract until it ends. The next change to the cap will take effect from January 2027 and, according to forecasts, may mean a further increase.
Working from home? Part of your bills is a business cost
Self-employed people who run their business from home can claim part of their household costs. There are two ways to do this.
1. Flat rate (simplified expenses)
This depends on the number of hours you work from home each month:
- 25-50 hours - £10 a month,
- 51-100 hours - £18 a month,
- 101 hours or more - £26 a month.
This is a simple method with no need to calculate your bills, but with high energy prices it is often less beneficial.
2. Proportion of actual costs
You work out what share of your home and your time is used for work, and you record that share of your energy, internet or rent bills as an expense. This requires documents and a reasonable calculation, but with large bills it gives a higher deduction.
If you have an LTD company
A company cannot simply pay a director's personal bills. However, it can pay the director a tax-free amount for working from home, or rent part of the director's home as an office - each of these solutions has its own conditions and documentation requirements. It is worth agreeing them with your accountant before you start.
How we can help
Global Tax Partners handles tax and accounting for Poles in the UK in Polish and fully remotely: self-employed and Self Assessment, LTD company accounting, company formation and matters involving both the UK and Poland. The first conversation is free of charge.
Call: +44 204 577 3027 or +48 505 684 412, or leave a message via the form - we will call you back.
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