Your business might be eligible for a reduced rate of VAT at 5% on energy supplied by us if any, or all the following circumstances apply...
It's a charitable or non-profit organisation
You may be able to claim a rebate for up to 4 years from the processing date we receive a valid VAT Certificate. Some charitable or non -profit organization may be entitled to reduced rate vat rate but only on supplies used for non-business activities
Some businesses where the supply of energy is for qualifying residential usage will also be entitled to this exemption
Some of your energy is used for domestic purposes
If your business uses energy for residential purposes such as a care home or student accommodation, the proportion of energy used for domestic reasons will quality for 5% VAT.
If more than 60% of your business energy is used for domestic reasons, the 5% rate of VAT will apply to the whole bill.
Local authority and free schools also benefit from supplies at reduced rate
Where a business uses at least 60% of consumed energy for ‘domestic purposes’ (only if they provide suitable evidence of how they calculated the percentage) their entire supply will be treated as qualifying for the reduced rate
You're using a 'low' amount of energy
For most businesses, the 20% Standard rate will be charged for the supply of gas/energy, unless usage is within the De Minimis limits.
If your business have a ‘low’ usage of energy, this is known as a De Minimis consumption
The system will calculate automatically whether the customer falls in the De Minimis level per invoice period not on annual usage
Your average daily use must be no more than:
•33kWh (1000 kWh per month) of business electricity
•145 kWh or 5 therms (4397 kWh per month or 150 therms) of business gas
If you qualify for a reduced rate of VAT on business energy, you won't need to pay the Climate Change Levy.