From 1 October 2026, qualifying electricity supplies in England, Scotland and Wales will temporarily be zero-rated for VAT until 31 March 2027, removing the current 5% VAT charge. 
 
The change applies to the same categories of customers that currently qualify for the reduced rate, including domestic consumers, qualifying residential establishments, non-business use by charities and certain de minimis supplies. The eligibility rules themselves are not changing, and other qualifying domestic fuels, including gas, will remain subject to 5% VAT. 
 
The change does not apply in Northern Ireland, where qualifying domestic electricity will continue to attract the existing 5% reduced rate. 
 
What does this mean for you? 
 
Electricity suppliers will need to ensure their billing and VAT accounting systems apply the new rate from 1 October and revert to 5% from 1 April 2027. Charities, residential establishments and other organisations currently receiving the reduced rate should check whether their electricity supplies qualify and ensure the correct VAT rate is being applied.

HMRC has changed how overseas members of VAT groups can recover UK VAT, potentially creating repayment opportunities for multinational groups. 
 
Revenue and Customs Brief 8 (2026) confirms that individual non-UK entities will generally need to submit their own refund claims rather than relying on the representative member of their VAT group. The change addresses an unintended consequence of Brexit that prevented some overseas group members from recovering UK VAT they had incurred. 
 
Transitional provisions apply to claims covering 1 July 2025 to 30 June 2026. HMRC will accept claims from either the individual overseas business or the representative member, with a deadline of 31 December 2026. 
 
What does this mean for you? 
 
Multinational groups with overseas VAT group members should review historic UK VAT costs and any previously rejected or blocked refund claims. There may be an opportunity to recover VAT that was previously unavailable, but affected businesses should review their position ahead of the December deadline.

Tapi Carpets VAT case 
 
A recent First-tier Tribunal decision highlights the importance of getting agency arrangements right for VAT purposes. 
 
The Tribunal considered whether fitting services supplied alongside carpet sales were provided by Tapi itself or directly to customers by independent fitters. It concluded that the fitters supplied their services directly to customers, with Tapi acting as an intermediary rather than purchasing and resupplying the fitting services. As a result, Tapi was not required to account for VAT on the fitting fees. 
 
The decision reinforces that simply describing a business as an ‘agent’ is not enough. Contracts, invoicing, VAT accounting and the way the relationship operates in practice all need to support that position. 
 
What does this mean for you?  
 
The implications extend beyond the retail sector. Marketplaces, service platforms, travel providers and businesses engaging independent contractors should consider whether their contractual arrangements and commercial practices support their intended VAT treatment.

Following the decision in Isle of Wight NHS Foundation Trust v HMRC, HMRC has revised its position on the VAT treatment of certain supplies of GMC-registered locum doctors. 
 
Revenue and Customs Brief 6 (2026) confirms that certain supplies of temporary medical staff may qualify for the healthcare exemption, including some circumstances where doctors are supplied through employment businesses. This represents a significant change from HMRC’s previous interpretation. 
 
The development could affect NHS bodies, healthcare providers and medical staffing agencies that have historically accounted for VAT on these supplies. 
 
What does this mean for you?  
 
Organisations affected should review both their current and historic VAT treatment. Where VAT has previously been accounted for on supplies that now qualify for exemption, there may be an opportunity to make a refund claim, although it is expected that overpaid VAT will need to be refunded to their customers. Organisations making a claim will need to consider adjustments to current and historic input VAT recovery.

The temporary 5% VAT rate for certain children’s meals, family attractions and entertainment admissions ended on 1 September 2026, meaning affected businesses need to ensure they have returned to the correct VAT treatment. 
 
HMRC has expanded Revenue and Customs Brief 5 (2026) to address practical issues including advance bookings, ticketing arrangements, family packages and promotional offers. 
 
This is particularly relevant for businesses across the hospitality, leisure and entertainment sectors that changed their pricing, tills or accounting systems when the temporary relief was introduced. 
 
What does this mean for you? 
 
Businesses should check that systems and pricing have reverted correctly and review transactions that span the 1 September cut-off. Particular care will be required where tickets or admissions were purchased before the relief ended but are being used afterwards, as transitional rules may affect the VAT treatment.

HMRC has proposed changes to simplify VAT accounting under the UK’s emerging Deposit Return Schemes for drinks containers. 
 
Under the proposed approach, businesses would no longer account for VAT on the deposit element at every stage of the supply chain. Instead, responsibility would sit centrally with the scheme administrator. 
 
The proposals are intended to reduce VAT complexity for retailers, wholesalers and manufacturers participating in the schemes and create a more consistent approach across the supply chain. 
 
What does this mean for you? 
 
Businesses likely to participate in a Deposit Return Scheme should start considering how the proposals could affect their VAT accounting, systems and processes. The changes are expected to be implemented through future Finance Bill legislation, so businesses should monitor developments as the final rules take shape.