Gas and Electricity for Charities: How You Should be Saving
Did you know that gas and electricity for charities is in a category of its own, with special discounted rates? If charities don’t keep a close eye on utility bills, they could very well be missing out on money that could be better spent in other areas of the organisation.
Every year, cash-strapped not-for-profit organisations and charities are losing money on their gas and electricity bills. Financial managers may not be aware that there are simple small changes these organisations can make that mean big savings on gas and electricity for charities.
We all know that not-for-profits and charities are under pressure to account for and justify their spending. Despite these rigorous reporting structures, these organisations are often overcharged for gas and electricity, unaware of VAT reductions, exemptions and rebates.
Why are charities being overcharged?
- Energy suppliers often neglect to put charities on their correct VAT rates by default
- A recent study revealed that 37% of charities were unaware of the relevant exemptions and reductions
- 74% were unaware that they can claim back on overpayments from up to four years ago
- Shopping the market for the best rates is time-consuming for finance and admin teams likely already stretched
How much are they missing out on?
The normal VAT rate on energy is 20%, but gas and electricity for charities should have a VAT rate of only 5% for gas and electricity used for ‘non-business ’purposes. Charities are also exempt from the Climate Change Levy (CCL), further reducing energy bills by 5%. These reductions can represent significant savings for the organisation.
Gas and electricity for charities: what you can do
Firstly, charities should dig out their energy bills and check their VAT rates. If the VAT rate is the standard 20%, they should take action. Not only should they claim the correct VAT rate going forward, but they can also claim a rebate for money incorrectly charged for up to four years.
As part of our comprehensive service, Smarter Business can advise charities on the correct VAT rates and assist with rebate claims. We are also able to obtain and compare quotes from different suppliers, securing the best energy for charity deals and implementing a strategy to maximise cost-effectiveness.
- Do you have questions around your eligibility for VAT relief?
- Do you want to find out if you qualify for potential savings on your gas and electricity?
Contact our team of experts in the not-for-profit sector to assist with your energy procurement, management and strategy requirements.