Energy bills in the United Kingdom will be reduced by hundreds.

Energy costs for UK homes will be reduced by hundreds of pounds this winter as part of a £10 billion package to help consumers cope with rising prices.

The government is scrapping a plan to pay consumers £200 off their bills starting in October, to be repaid over five years.

Instead, it is understood that the amount will be increased, potentially doubled, and will not have to be repaid.

One-time payments to select disadvantaged households and a further reduction in fuel VAT could also be announced.

The assistance, which will be announced later by Chancellor Rishi Sunak, is expected to be largely funded by a windfall tax on oil and gas.

Labour has consistently advocated for a windfall tax on energy companies that have achieved record profits, owing largely to Russia’s invasion of Ukraine.

However, the government had previously opposed requests to apply the one-time charge, claiming that it would discourage energy corporations from investing in the UK.

However, it is believed that the prime minister has now sided with Mr Sunak, who had advocated for the tax.

Proposals to tax profits from other electricity producers, such as certain older wind farms and nuclear plants that have also received windfall gains, have been put on hold.

Companies that expand their investment in the UK may be eligible for a tax break.

According to the Treasury, the government understands “that people are struggling with increased prices,” and Mr Sunak has been “clear that as the situation evolves, so will our reaction.”