Home energy guide
Fixed vs variable energy tariffs: how to decide
A fixed tariff locks your prices for a set time; a variable one moves with the price cap every quarter. Neither is always cheaper. It depends on what the cap does next, and nobody knows that for sure.
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Work out your own numbers with the tariff calculator →
The basics
A fixed tariff locks your prices for a set time, but often charges you to leave early. A standard variable tariff follows Ofgem's price cap, which moves every three months, and you can leave any time for free.
See the numbers
| Fixed | Standard variable (capped) | |
|---|---|---|
| Unit rates | Set for the term | Change each quarter with the cap |
| Exit fees | Often, if you leave early | None |
| Price protection | Yes, for the term | Capped, but the cap moves |
| Covered by the Ofgem cap | No | Yes |
The cap from 1 October to 31 December 2026 is 26.32p per kWh and 54.83p a day for electricity (no VAT until 31 March 2027) and 7.97p per kWh and 29.68p a day for gas (including 5% VAT).
How to judge a fix in four steps
- Get the fixed unit rates and standing charges for your region and payment method.
- Work out your yearly cost on the fix and on the current cap, using your own yearly use from your bill.
- Compare. A fix that costs £50 a year more than the cap is a bet that the cap will rise by more than that.
- Check the exit fee. It's the known price of escaping if prices fall.
A quick example
A home using 2,700 kWh of electricity a year pays about £911 at today's cap. An imaginary fix at 25.5p and 55p a day would cost about £889, saving £22 a year if the cap stayed flat. The fixed rates are made up for illustration; check real offers.
See the numbers
Cap: 2,700 × 26.32p + 365 × 54.83p ≈ £911. Example fix: 2,700 × 25.5p + 365 × 55p ≈ £889.
The VAT twist in 2027
Ofgem's figures show no VAT on home electricity from 1 October 2026 to 31 March 2027. If that ends as planned, variable electricity prices rise by 5% from April 2027, all else equal.
Before you sign a fix, ask how its prices are quoted: do they include VAT, and what happens if the VAT rate changes during the term? We haven't checked how each supplier handles this.
Dates for your diary
- 25 November 2026: Ofgem announces the January–March 2027 cap.
- 23 February 2027: April–June 2027 announcement.
- 31 March 2027: planned end of 0% VAT on home electricity.
- 26 May 2027: July–September 2027 announcement.
Fix if…
- you'd rather know your bill than gamble on a small saving;
- the fix is at or below the current cap;
- exit fees are low or zero.
Stay variable if…
- you plan to move to a smart time-of-use tariff soon (EV, battery or heat pump);
- you might move house;
- the fixes on offer are well above the cap.
Smart and time-of-use tariffs
Some time-of-use tariffs come in both flavours. Cosy Octopus, for example, has fixed and flexible versions; Octopus Flux is flexible with no exit fees. If your use is flexible, the type of tariff often matters more than whether it's fixed. See Economy 7 vs smart tariffs.
Don't forget standing charges
A fix with a low unit rate but a high standing charge can cost more for a low-use home. See standing charges explained, then compare in the tariff calculator or read the price cap explainer.
Guernsey and Jersey
Each island has one main supplier and no Ofgem cap, so there isn't a fixed-vs-variable market in the same way. See our island tariffs guide.
When your fix ends
Do nothing and you'll normally move to your supplier's standard variable tariff, which the cap covers. Suppliers should warn you before the end date, so pop it in your diary and compare offers then.
Frequently asked questions
Is it better to fix energy prices now?
Only if the fix is close to or below the current cap and you value certainty. Nobody knows future caps; the next is announced on 25 November 2026.
Are fixed tariffs covered by the price cap?
No. The Ofgem cap applies to standard variable tariffs.
What happens to VAT on electricity in April 2027?
Ofgem's figures show no VAT on domestic electricity until 31 March 2027. Ask suppliers how fixed prices handle VAT changes.
Can I leave a fixed tariff early?
Usually, but there may be an exit fee. Check before you sign.
Related guides
- EV tariff vs the price cap: break-even
- The energy price cap explained: October to December 2026
- Economy 7 vs smart time-of-use tariffs
- Standing charges explained
- Guernsey and Jersey electricity tariffs compared
- All home-energy calculators
Sources (checked 27 October 2026 unless stated)
- Ofgem: price cap 1 Oct–31 Dec 2026 (published 26 Aug 2026): cap rates, VAT treatment, announcement dates
- Octopus Energy: Cosy Octopus: fixed and flexible versions
- Octopus Energy: Octopus Flux: flexible, no exit fees
- Supplier handling of VAT changes on fixed tariffs: not verified
- Fixed rates in the example: invented for illustration