Death and Taxes

INFOGRAPHIC: How to save on VAT on your business utilities bill

VAT is naturally applicable to your business utilities bill, together with other levies and taxes.  However, some organisations qualify for discounts and a reduced VAT on utilities amount.

Reduced VAT should be incorporated into your energy bill automatically, but this is something that should be checked regularly to ensure that the correct discounts are being applied. This is often where an external consultant can come in handy to help.

How to save on VAT on your business utilities bill

Nothing is certain in life but death and taxes” – Benjamin Franklin

But how much VAT should your business be paying on your utilities?

What is VAT?

  • Consumption tax
  • Levied by the government on services and goods bought or sold for consumption or use, utilities.

VAT on utilities in numbers:

  • 100% of businesses will need to pay some level of VAT on their energy bills.
  • £82,000: If your business’ annual taxable turnover is more than this, you must register for VAT.
  • 20%: The rate of VAT paid by most businesses
  • 0%: The amount of business utilities VAT that can be claimed back, even though it’s  a business to business purchase.

Is your business eligible for a VAT discount?

If your organisation meets certain requirements, you may be eligible to pay a reduced 5% rate of VAT on your business utilities bills:

☑ 60% or more of your business’ energy is used for non-commercial purposes.

☑ You are a charitable or non-profit organisation.

☑ Your business uses less than 33 kWh of electricity per day, or 1,000kWh per month.

☑ Your business uses less than 145 kWh of gas per day, or 4,397kWh per month.

How does the Climate Change Levy (CCL) work?

What it is: A business tax to encourage energy efficiency and reduced gas emissions.

Does your business qualify for an exemption or reduction?

☑ Qualify for a reduced rate of VAT? You may qualify for exemption from the main CCL rates.

Sign a Climate Change Agreement > make a commitment to energy-efficient improvements > reduce your business emissions and consumption > qualify for a CCL discount

How to ensure you’re never paying more than you should on your business utilities VAT

  • Stay on top of your contract renewals
  • Check that you supplier is automatically applying the relevant VAT discount to your bill
  • Use a specialist energy consultant to ensure the accuracy of the tax associated with your bills

Smarter Business has the expertise to advise your business on its VAT, tax, and levy standing. We are here to help you find out about your eligibility for reductions and exemptions, assist with applications, and claim back in the event of overcharging. Contact Smarter Business today – your single source of utilities solutions.

Speak to a Smarter Business Utilities VAT Consultant today.


Does your business qualify for a VAT discount? Read our infographic to find out:

Business Utilities - VAT Infographic - Smarter Business