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VAT Declarations for Business Energy

Typically, VAT is charged on company energy at 20 percent. In some circumstances, however, a business energy customer can qualify for a reduced VAT rate and only have to pay the domestic rate of 5%.

The situations that give rise to this are:

  • Energy for non-business charitable use
  • Energy, where the quantity provided, does not exceed the national qualifying use de minimis boundaries
  • Energy is eligible for qualifying use by at least 60 percent

What is the qualifying use?

Qualifying use means:

  • 'Domestic use' or
  • 'Charity non-business use'

De minimis

Domestic use is less than a fixed rate of use. This is known as the stage of minimal. Whether you are a business or a domestic customer if you consume less than these levels, you will be considered' domestic use' and eligible for VAT at a reduced rate of 5%

The de minimis for a gas customer is where daily use is no more than an average rate of 145kWh (4,397kWh per month) of piped gas for one customer at any of the customer's premises. Whether the bill is based on a meter reading-either by the provider or the client-or on an estimate, this restriction applies.

Consumption must not be more than an average rate of 33kWh per day (1,000kWh per month) for electricity clients.

A gas client with an annual consumption of less than 52,764 kWh and an energy client with an annual consumption of fewer than 12,000 kWh will, therefore, attract a 5% VAT rate.

Essentially, a company in this scenario does not need to finish a VAT statement certificate in order to apply the decreased rate, this should be done automatically by your energy provider.


Besides the de minimis laws, some clients who exceed these rates also rate only as national use.

This is primarily the case if they are for use in residential housing or certain kinds of housing (excluding hospitals, prisons or comparable institutions, restaurants or inns or comparable establishments). Examples are the following:

  • children’s homes
  • homes providing care for –
    (a) the elderly or disabled
    (b) people with a past or present dependence on alcohol or drugs
    (c) people with a past or present mental disorder
  • hospices
  • institutions that are the sole or main residence of at least 90 percent of their residents
  • monasteries, nunneries, and similar religious communities
  • school and university residential accommodation for students or pupils, and
  • self-catering holiday accommodation

What is 'charity non-business use'?

Where a charity does charge for its services, its activities are assumed to be ‘non-business’.

Supplies of energy to non-business activities such as these also attract the reduced rate of VAT.

Where a charity charges its services, it is presumed that its operations are ' non-business. ‘Energy supplies to such non-business operations also attract the lower VAT rate

What is ‘mixed-use'?

If a business premise is used partly for qualifying use and partly for non-qualifying use, and 60% or more of the energy for the former is used, then the entire supply will be treated as eligible for VAT at a reduced rate of 5%.

Where less than 60% of the electricity is used for qualifying purposes, distinct VAT treatments should apply to both qualifying and non-qualifying ratios. Under this scenario, VAT will be charged at a reduced rate of 5% for the qualifying use portion and VAT will be charged at a standard rate of 20% for the non-qualifying use portion.

VAT Declaration Certificates

Customers eligible for decreased rate VAT payments under' Charity –non-commercial use' and' mixed-use' require completion of a VAT statement certificate within which they will have to declare the proportion of electricity provided for' qualifying' use.

They will have to guarantee that they provide a distinct statement for each supplied energy supply and that they are contracted with each provider.

When changing providers, they will also have to guarantee that they finish their VAT statement forms to guarantee that they remain eligible for the decreased rate.

Below is a set of connections for each company's energy supplier's VAT statement certificates. Use these to declare your stance to your energy provider if you believe your company qualifies for a decreased rate of VAT. Remember that you will need to fill out a form for each website and provider combination.

To obtain your VAT statement certificate, visit our devoted provider websites.

We'd love to hear from you for more assistance with VAT and to find out if your company can profit from reduced rate payments, call us at 08000488472.

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