What VAT rate applies to business energy?
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In short: Business gas and electricity attract 20% VAT by default in the UK. Charities and qualifying small businesses using low energy may apply for the reduced 5% VAT rate on fuel and power if eligible under HMRC rules — domestic use in mixed premises can also affect split VAT treatment.
Content updated:
Domestic household energy pays 5% VAT — business premises pay 20% unless you qualify for reduced rate certification from HMRC.
Mixed use — shop with flat above — may need apportionment between domestic 5% and business 20% based on meter split or floor area calculations.
Climate Change Levy adds to business energy bills unless you hold a CCL relief certificate for mineralogical or metallurgical processes, or qualify for other exemptions.
Apply for VAT reduced rate via form VAT1614A for charities and eligible small usage. See business energy explained and gov.uk VAT on fuel and power.
Primary source: gov.uk/guidance/vat-on-fuel-and-power-notice-70119
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