Paying the right amount of Value Added Tax (VAT) is fundamental for any business. You may be eligible for the reduced rate of VAT if you meet certain criteria.
VAT will normally be charged at the standard rate if the energy you use is solely for business or non-domestic purposes. VAT, which is also applied to Climate Change Levy, will be added to your bill.
A reduced VAT rate is available through a government concession for ‘low usage’ of electricity and gas. Where applicable, the reduction is applied automatically to your bill. The current low usage thresholds are:
- Electricity - at or below 33 kWh per day during the bill period
- Gas - at or below 145 kWh per day during the bill period.
If use is wholly or partly for domestic or charitable non-business purposes, that part of the supply qualifies for the reduction. This is known as ‘qualifying use’. You will need to complete a VAT Certificate of Declaration (for each account) advising us of the qualifying use.
Where there is 60% or more qualifying use (either domestic or charitable non-business), the whole of the supply is chargeable at the reduced rate of VAT. Your VAT Certificate of Declaration should, however, reflect your best estimate of the actual percentage of qualifying use. As per HM Revenue and Customs (HMRC) guidelines.
Learn more about the government’s VAT guidelines.