Wednesday’s Budget was billed as the one that would finally do something about energy bills. If you run a shop, a workshop, a restaurant or a small factory, here is the unglamorous truth: most of it was aimed at households, not at you. But two things in it matter a great deal, and one of them has a deadline in four weeks.
The £100 isn’t yours
The headline measure was a Household Energy Payment: £100 each for up to 20 million homes in England in council tax bands A to D, arriving in January. It comes through the council tax system, which tells you everything about who it is for. If you run your business from premises, there is no business equivalent. If you run it from your kitchen table, you may get it as a householder, but not as a trader.
It is also worth knowing what it is up against. Before the Budget, Cornwall Insight was forecasting the domestic price cap rising about 16% in January, roughly £276 a year. January to March is the heaviest quarter for energy use, so that increase lands hardest exactly when the £100 arrives. The payment broadly cancels out one quarter, then stops. Nobody in government has claimed otherwise, but a lot of the coverage has rounded it up to “bills are coming down”. They are not.
The VAT cut probably isn’t yours either
This is the one that catches people out, so it is worth being precise.
Since 1 October, domestic electricity has been zero-rated for VAT instead of charged at 5%. The Budget extended that to July 2027. Plenty of commentary has said small businesses benefit. Most do not.
The relief only applies to supplies at or below what HMRC calls the de minimis threshold: 1,000 kWh of electricity a month, or 33 kWh a day, measured per premises. That is a very small amount of power. A single-room office, a tiny salon, a lock-up. Meanwhile Ofgem’s definition of a “micro-business” stretches all the way up to 100,000 kWh a year, roughly eight times the VAT threshold. So the great majority of businesses that sound like they should qualify are standard-rated at 20% and get nothing from this.
Two further things. It applies in Great Britain only, with Northern Ireland expected to follow from April 2027. And even where it does apply, it only really bites if you cannot reclaim your input VAT. If you are VAT-registered, you were never paying it in the first place. The businesses this genuinely helps are unregistered sole traders and small partnerships, charities and care homes.
If you think you might be under the threshold, dig out a bill and check the kWh figure rather than the pounds. And diarise July 2027, because the rate goes back up.
If you make things, read this bit
Here is the measure with real money in it, and a deadline.
The British Industrial Competitiveness Scheme was confirmed in the Budget, with funding for more than 10,000 manufacturers from April 2027 and a back payment covering 2026/27. It works by exempting you from three of the policy levies buried in your electricity bill: the Renewables Obligation, Feed-in Tariffs and the Capacity Market. For a fully qualifying site that is a meaningful chunk off your unit rate.
Applications close at 11:59pm on 30 November, and you cannot amend them once submitted.
The catch is in how the relief is calculated, and it is a cliff edge rather than a slope. It depends on what share of your site’s grid electricity goes into eligible manufacturing:
50% or more: you get the full exemption
More than 25% but under 50%: you get half
25% or less: you get nothing
So a site at 51% gets twice what a site at 49% gets. If you are anywhere near those lines, the way you evidence your eligible production is worth more than almost anything else you will do with your energy bill this year. Decisions land in early 2027, the Renewables Obligation and Feed-in Tariff exemptions start in April 2027, and the Capacity Market one follows in October 2027, so do not put the full saving into your Q1 budget.
You will also need an eligible SIC code, eligible products by HS code, at least 33 MWh a year of grid electricity at the site, and six months of bills. If you already claim relief under the older British Industry Supercharger scheme, you can hold both, but not for the same activity, and the Supercharger is usually the richer of the two where you qualify for it.
The standing charge news, and the bit that affects you later
Gas standing charges are being abolished, averaging £108 a year, with Ofgem asked to deliver by the end of 2027. That is domestic only. Your business gas bill is untouched.
It is also worth understanding what “abolished” means here. The £108 does not disappear, it gets folded into the unit rate. Households that use little gas win; households that use a lot, usually the ones in poorly insulated homes, pay more. The government has promised “targeted mitigation” and has not said what it is.
The line to watch is the next one: electricity standing charges will also be “reformed”, with details promised next year. Business standing charges are not capped at all, which means there is nothing stopping them moving. If you have watched your standing charge creep up over the past few years, that is the sentence in the Budget to keep an eye on.
The quiet change that matters most
Strip out the giveaways and one structural thing happened on Wednesday.
For about fifteen years, the way Britain paid for energy policy was to add a levy to everybody’s bill. Renewables, nuclear, capacity payments, insulation schemes: all of it collected through the thing that arrives in your inbox every month. It was convenient for the Treasury because it never appeared as public spending.
That is now being unwound. Last year the government scrapped the Energy Company Obligation levy and moved three quarters of the Renewables Obligation onto the Exchequer. This year it scrapped a planned levy that would have put hydrogen costs on gas bills, and promised that no new policy costs go on bills at all until a new “Cost Control Framework” arrives at the 2027 spending review.
For a small business, the good news is straightforward: fewer new line items appearing on your bill without warning. Taxing electricity to pay for policy was always a bit perverse, given everyone is being encouraged to electrify.
The less comfortable part is that money funded by general taxation is reviewed every year and competes with everything else. The same Budget took £200m off carbon capture grants, £500m off hydrogen and £1bn off the Warm Homes Plan, all redirected to defence. So if your business plan depends on a government grant or support scheme, treat it as less certain than a levy would have been. That is not a prediction. It happened on the same afternoon.
Three things to do before the end of November
Check your kWh, not your pounds. If any site uses under 1,000 kWh of electricity a month, you may be zero-rated for VAT. If you are not VAT-registered, that is real money.
If you manufacture anything, apply for BICS by 30 November. Then check which relief band you fall into, because the gap between 49% and 51% eligible use is enormous.
Look at your standing charge. It is the part of your bill you cannot reduce by using less, it is not capped for businesses, and reform is coming next year. Know what you are paying now so you can tell if it moves.
The honest summary
This was a Budget about who pays for energy, not what energy costs. Wholesale gas was trading around 250p a therm this week, and nothing announced on Wednesday changes that by a penny. Households got a cheque and a VAT extension. Manufacturers got a scheme worth applying for. Everyone else got a promise that the bill will stop growing new limbs for a couple of years.
That is not nothing. But if you were waiting for the Budget that makes your energy cheaper, keep waiting.