How to read your energy bill
Every energy bill is built from four things: the unit rate for each kWh, a daily standing charge, how much you used and VAT. Under Ofgem’s price cap from 1 October to 31 December 2026, a typical home paying by Direct Debit pays £658 for electricity, £200 in electricity standing charges, £757 for gas and £108 in gas standing charges: £1,723 a year.
By the billsqueeze team · Facts checked: 31 October 2026 · Updated:
- Your bill = units used × unit rate + days × standing charge.
- Typical Direct Debit bill: £1,723 a year; prepayment £1,678; Standard Credit £1,861.
- VAT on electricity is 0% until 31 March 2027; gas is 5%.
- Check for estimated readings and send your own.
The four numbers that make your bill
- Unit rate: the price for each kilowatt hour (kWh) you use.
- Standing charge: a fixed amount for each day you’re connected.
- Usage: how many kWh you used, from meter readings.
- VAT: 0% on household electricity from 1 October 2026 to 31 March 2027, and 5% on gas.
A typical bill, line by line
| Line on your bill | Typical use | Rate | Cost a year |
|---|---|---|---|
| Electricity used | 2,500 kWh | 26.32p per kWh | £658 |
| Electricity standing charge | 365 days | 54.83p a day | £200 |
| Gas used | 9,500 kWh | 7.97p per kWh | £757 |
| Gas standing charge | 365 days | 29.68p a day | £108 |
| Total | £1,723 |
How you pay changes the price
| How you pay | Typical bill a year |
|---|---|
| Direct Debit | £1,723 |
| Prepayment meter | £1,678 |
| Standard Credit (pay when the bill arrives) | £1,861 |
Things to check on every bill
- Actual or estimated readings. An “E” or “estimated” means the supplier guessed. Send a reading to get an accurate bill.
- Your tariff name and end date. If you’re on a fixed deal, note when it ends: you can switch without an exit fee in the last 49 days.
- Your yearly usage in kWh. You’ll need it to compare deals.
- Your balance. If you’re well in credit, you can ask for a refund.
See the price cap where you live
Unit rates, standing charges and a typical bill for all 14 regions, with a calculator.
Common questions
How is my energy bill calculated?
The kWh you use multiplied by the unit rate, plus a daily standing charge for each day, for gas and electricity separately.
What does “estimated” mean on my bill?
Your supplier didn’t have a meter reading and guessed your usage. Send a reading to get an accurate bill.
Is it cheaper to pay by Direct Debit?
Usually. Under the cap a typical home pays £1,723 a year by Direct Debit and £1,861 on Standard Credit.
Is there VAT on my energy bill?
Not on household electricity from 1 October 2026 to 31 March 2027. Gas has 5% VAT.