How much is VAT on energy?

The majority of businesses will be paying VAT at a rate of 20% on their electricity and gas bills.

VAT on Electricity for Small Businesses

Some organisations qualify for discounts and a reduced VAT on electricity for small businesses…

VAT on electricity for small businesses

Levied by the government for a range of goods and services, business VAT on utilities is naturally applied together with other levies and taxes. Not only does this underscore the importance of finding the best contract tariffs for your business, but it highlights the benefit of having an energy consultant to ensure the accuracy of the tax associated with your bills.

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How much is VAT on electricity for small businesses?

The VAT rate on utilities for SMEs is normally 20%. However, your small business may be eligible for reductions on your utilities VAT.

Find out if your organisation qualifies for VAT on electricity exemptions/discounts

All businesses pay VAT on their energy accounts – normally in the region of 20% – but some organisations qualify for discounts and a reduced VAT amount. If your business falls into one of the following categories, it may qualify for discounts and reduced VAT on utilities:

  • If you meet the de minimis requirements for low consumption;
  • If your premises are commercial and non-commercial and the majority of your usage is non-commercial;
  • You are a charity or not-for-profit organisation.

Reduced VAT should be incorporated into your energy bill, but this is something that should be regularly checked to ensure you are paying the correct rate. If you qualify for a VAT reduction, it is likely your business also stands to be exempt from the main Climate Change Levy (CCL) rate. This encourages energy efficiency and urges reduced gas emissions for businesses.

How Smarter Business can help

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 one of our Business Utilities VAT consultants