Does October’s electricity VAT cut make electric heating cheaper than gas?

Not automatically. The October VAT cut helps electricity relative to gas, but it does not make a plug-in heater as cheap as a gas boiler for the same amount of heat at typical capped unit rates. A heat pump is a different comparison because it moves heat rather than simply turning electricity into heat.

Warming one room for a short time can also use less energy than heating a whole home. That is a question about how much heating you need, not proof that electricity has become the cheaper fuel.

What changes in October?

HMRC’s temporary VAT measure makes qualifying domestic electricity in England, Scotland and Wales zero-rated from 1 October 2026 to 31 March 2027. Domestic gas remains at 5%. The electricity change does not apply in Northern Ireland.

The tax change arrives alongside new price-cap rates. Ofgem says the VAT reduction keeps electricity bills broadly stable against upward pressure from wholesale costs, while gas costs rise more sharply. A smaller electricity-to-gas price gap does not mean every household bill falls.

Octopus’s 23 September spark-gap explainer makes that relative-price argument and points to heat pumps and specialist tariffs. It is not a claim that every electric heater now beats gas.

For the bill transition itself, see our October electricity VAT guide.

Three kinds of electric heating, three different decisions

Direct electric heating includes panel heaters, electric radiators and electric boilers. Portable heaters can provide a short top-up in one room. These systems use electricity directly for heating, so a cheap purchase price is not the same as a low running cost.

Storage heaters take electricity during cheaper periods and release the stored heat later. Their useful comparison is the cost of charging them, how well the stored heat lasts and whether daytime top-ups are needed. They should not be compared using a standard daytime rate alone. Energy Saving Trust’s electric-heating guide explains the different systems.

Heat pumps move heat from the air or ground. They can deliver several units of heat for each unit of electricity, but performance varies with the system and conditions. For an annual comparison, use the proposed seasonal performance factor rather than a best-case efficiency figure. Energy Saving Trust explains the difference between COP and seasonal performance.

Compare the cost of useful heat

The unit rate on your bill is the price of fuel going into the system. It is not always the price of the heat you get out.

For this example, checked on 24 September 2026, Ofgem’s October to December 2026 average Direct Debit benchmark for Great Britain is 26.32p/kWh for electricity and 7.97p/kWh for gas. Those figures already include the October VAT treatment. They are not a personal Octopus quote: region, payment method and tariff matter. Check the linked current benchmark and regional tables alongside your own account rates.

Using those dated benchmark prices:

• A simple direct-electric model, assuming one unit of room heat per unit of electricity, costs 26.32p per kWh of heat.
• A gas-boiler model at an assumed 90% efficiency costs about 8.86p per kWh of useful heat: 7.97 divided by 0.90.
• A heat-pump model at an assumed seasonal performance factor of 3 costs about 8.77p per kWh of heat: 26.32 divided by 3.

These are calculated energy-only illustrations, not measured results for your home. The boiler and heat-pump performance figures are assumptions, not guarantees.

The near-tie in this heat-pump example is not a savings forecast. It excludes installation, maintenance, standing charges, boiler auxiliary electricity and system-specific losses. It also holds October benchmark prices constant rather than forecasting a full heating season. A different tariff or system performance changes the result.

For direct heating, the useful question is whether the electricity price when you actually need heat is below the gas price divided by the boiler’s effective efficiency. Do not compare a cheap overnight electricity rate with daytime heating that you cannot shift.

Could a portable heater still cost less for one room?

Possibly, if it replaces enough other heating rather than running alongside it. Energy Saving Trust says secondary heating can be useful for warming one room briefly, while warning that its cost per unit of heat can be higher than a main heating system.

At the dated October to December 2026 GB Direct Debit electricity benchmark above, a 2kW heater running continuously for one hour uses 2kWh and costs about 53p. That is a calculated example, not a prediction: a thermostat may switch it on and off, your local tariff rate may differ and the room’s heat loss affects how long it needs to run.

Compare that with the heating you would actually avoid. If the gas heating continues unchanged, the portable heater is an extra cost. If your existing controls can already warm the rooms you use, compare that option too. Do not assume a whole-house boiler must always heat every room equally.

Keep comfort and safe temperatures ahead of a small cost difference. This is not a recommendation to leave parts of the home unhealthily cold or to replace a suitable main system with portable heaters.

Does a cheaper Octopus window settle it?

No. It gives you another set of prices to test against the heating routine.

The Cosy Octopus page currently lists heat pumps, electric boilers and electric radiators as eligible heating types. It tells customers with another system to ask Octopus. Do not assume that buying a portable heater guarantees eligibility.

Cosy has cheaper periods at 04:00–07:00, 13:00–16:00 and 22:00–00:00, with a higher-priced 16:00–19:00 period. You need to consider the whole household’s electricity use, not just the hours when heating looks cheapest. Joining also depends on a compatible communicating smart meter, half-hourly readings and accepting the smart-tariff terms. Check current eligibility and postcode prices on the linked Cosy page.

If you already have storage heating, ask how a proposed tariff works with its meter, charging controls and normal heating routine before changing. A heat-pump tariff label is not enough to answer that question.

Our Cosy running-cost guide covers the heat-pump scheduling decision. The separate Cosy fleet-claim article explains why Octopus’s measured heat-pump results are not a promise for your home.

Keep standing charges and safety separate

Standing charges are daily charges, separate from each unit you use. Do not count a gas standing-charge saving merely because you use the boiler less. Check the continuing gas-supply charges with your supplier before treating a move away from gas as a whole-bill saving.

For portable heaters, follow the manufacturer’s instructions and Electrical Safety First’s advice: use a level surface, keep combustible materials at least one metre away, do not dry clothes on or near the heater and do not use an extension lead. Never leave it running unattended or while you are asleep.

A cheap overnight period is not a reason to leave a portable heater running while you sleep. Properly installed storage heating is a different system from an unattended plug-in room heater.

The useful next step

Start with the heating system you have, the rooms and hours you need warm and the electricity and gas rates that will actually apply to your account. Keep tax changes, system efficiency and the amount of heat required as separate parts of the calculation.

The October change improves electricity’s position relative to gas. It does not remove the difference between direct heating, stored heat and a heat pump. Check that distinction before buying equipment or switching tariff.

Use the postcode tariff comparison alongside your actual gas quote. If Octopus still suits your household after those checks, the referral page explains how to use our referral link.