VAT is calculated on energy supply to businesses at 20%. However, there are some exceptions where supplies to businesses may be eligible for the reduced rate at 5%.
You may be eligible if:
If you believe your meter may fall into one of the first two categories, please see our guidance sheet for further information, or our section on qualifying use. You can also check out our FAQs.
To apply for the reduced rate for one of these reasons you will need to complete a VAT declaration and submit this to our Welcome Team at email@example.com.If you believe that your meter may fall into the third category, please see our section on De Minimis.
De minimis is a term used to describe the threshold at which VAT will either be charged at 5% or 20% if the site does not qualify for a VAT exemption. If the consumption falls below the de minimis level, this is considered as domestic use by HMRC regardless of the actual use and will be charged at 5%. In these instances, consumption is calculated based on meter reads and the VAT will be calculated from this so you will not need to provide any supporting evidence.
The de minimis level for gas consumption is below an average rate of 5 therms or 145 kilowatt hours per day, 150 therms or 4,397 kilowatt hours per month to qualify for VAT at 5%. For electricity the de minimis threshold is below an average rate of 33 kilowatt hours per day, 1,000 kilowatt hours per month.
For more information, visit gov.uk. De minimis is explained in sections 3.2.2, 4.2 (for gas) and 5.2 (for electricity).
If a site qualifies as either domestic or charitable non-business use, they may be eligible for the reduced rate of VAT.
To find out if you are eligible for reduced rates please read our VAT and CCL guidance notes.
Alternatively, for further information regarding VAT, don’t hesitate to contact our energy advisors on:
Additionally, customers can look up the HMRC advice centre or website: http://www.hmrc.gov.uk or HMRC National Advice Centre 0845 010 9000.
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