VAT & CCL Charges on Electricity

 

What rate of VAT should I be charged for my gas or electricity?

 

Certificate in respect of premises qualifying for supplies of fuel and power at the reduced rate of VAT

Exemptions and reductions for VAT on electricity.


VAT for business consumers of energy is normally charged at 20%. However, some businesses will meet the 'Deminimis' requirements and then would be billed at 5%. This means using an average of no more than 33 kWh per day (1,000 kWh per month) for business electricity and/or less than an average of 5 therms or 145 kWh per day (150 therms or 4,397 kWh per month) for business gas.

 

In other cases, certain types of use also result in lower VAT costs.

 

 

 

What is the Climate Change Levy?

The Climate Change Levy (CCL) is a Government tax, introduced in 2001, on the use of energy by businesses, agriculture and the public sector which applies to both gas and electricity. The aim of the levy is to encourage industry, commerce and the public sector to improve energy efficiency and reduce greenhouse emissions. Current Electricity CCL is 0.47p per kWh and Gas CCL 0.164p per kWh.

Do any types of business qualify for 5% VAT and CCL exemption?

 

Certain types of building uses can be exempt. The list below provides details of some of them.

Residential use

 

Broadly speaking, residential use includes fuel and power used for the purpose of heating and lighting any premises where people live.  This includes:

  • children’s homes, residential care homes and hospices;
  • school boarding houses and student halls of residence;
  • accommodation for the armed forces, such as barracks;
  • monasteries, nunneries and similar;
  • any other institution which is the sole or main residence of at least 90% of its residents other than a hospital, prison, hotel, inn or similar.
  • An institution which is the sole or main residence of at least 90% of its residents - except hospitals, prisons or similar institutions, hotels, inns or similar
  • Self-catering holiday accommodation, caravans & houseboats

Securing CCL-free supplies of fuel and power

 

In addition, certain low-volume supplies of fuel and power are automatically deemed to be for domestic purposes.  In particular any supply of:

  • up to 1,000 kilowatt-hours per month of electricity;
  • up to 150 therms per month or 4,397 kilowatt-hours per month of mains gas;
  • up to 2,300 litres of fuel oil, gas oil or kerosene,

is automatically lower-rated for VAT and CCL-free.

 

 

Can Charities or

Not-For Profit Organisations minimise their VAT or CCL?

This is an area where you may be able to save on VAT and the CCL (Climate Change Levy). If you comply with certain criteria you can minimise or elimate VAT and CCL.

 

Charitable non-business use

  • An institution which is the sole or main residence of at least 90% of its residents - except hospitals, prisons or similar institutions, hotels, inns or similar
  • Self-catering holiday accommodation, caravans & houseboats
  • Charitable organisations

For full details of VAT on Fuel and Power you can find the government notice here: VAT Notice 701/19

Touchstone Services
23 Aldershot Enterprise Centre, Mandora House
Gallwey Rd,
Aldershot, Hampshire GU11 2DD
Phone: 01252 338777 01252 338777
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