VAT on business energy

Does my business have to pay VAT on gas and electricity?

Most businesses are charged VAT at the current rate of 20% for business energy. As your energy supplier, we’ll set up your account on the current rate and this will be charged on your gas and electricity bills.

You may be eligible to pay the lower, domestic VAT rate of 5% depending on the type of business you own and the way you use energy.

Or

How do I get a reduced VAT rate on business energy?

Your business might be eligible for a reduced rate of VAT at 5% on business energy 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 12 months from the date we receive a valid VAT Certificate.

 
  • 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.

 
  • You're using a 'low' amount of energy

When your average daily consumption of energy is not more than the 'de minimis' limits set out by HMRC, then you are eligible to be charged 5% VAT on your gas and electricity bills.

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.

What if my business circumstances change?

If your circumstances change, meaning your business is no longer eligible for a reduced VAT rate, you'll need to complete and submit a new VAT Certificate to let us know.

To apply for a VAT reduction and to help us set up your account correctly, you must submit a VAT Certificate.

You can apply

Or

Submit your VAT Certificate online

We just need some information…

Your moving date

Your business details

Your business details

Your qualifying details

First meter reads

Declaration

Your move in date

Your business details

Opening meter reading

Your qualifying details

Business name, address, phone no.

Declaration

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Before you start, it may help to have your latest energy contract or bill to hand.

You’ll need to provide a separate form for each qualifying property and fuel type.

Submit your VAT Certificate by post

Download and complete our VAT Certificate.

You'll need to provide a separate form for each qualifying property.

Post your completed VAT Certificate(s) to:

British Gas, Business Customer Operations, Winnall Down, Alresford Road, Winchester, SO21 1FP

Frequently asked questions

 

 

What types of business are charged a lower rate of VAT?

A: Charities and non-profit organisations that use part or all their energy for non-business use, businesses that use some or all of their energy for domestic purposes and low energy users - defined as using less than 1,000 kilowatt hours (kWh) of electricity every month (33 kWh a day), or 4,397 kWh of gas (145 kWh a day).

VAT may revert to the default rate – currently 20% - if the business energy use changes.

Some suppliers may be granted VAT relief at 0% where, for example, energy use has been declared for visiting NATO forces. 

Does Climate Change Levy apply if my business pays a reduced rate of VAT?

A: No, you won't have to pay the Climate Change Levy (CCL).

Will one VAT Certificate cover both my gas and electricity?

A: Yes, if you complete and send a VAT certificate by post and we are the current energy supplier for both fuel types. You’ll need to submit separate forms for gas and electricity if you apply online.

Is there a quicker way to apply for multiple properties?

A: You can complete a Group VAT Declaration and Certifying document and submit them using the contact details on your latest bill. 

Can I request a VAT reduction by phone?

A: No, we need a valid VAT Certificate, which you can submit online, or by post to meet our regulatory obligations.

Where can I get help to complete the VAT Certificate?

A: See paragraph 3.5 of VAT Notice 701/19 on the HMRC website.  

Can you back-date my VAT changes if I send a certificate after the qualifying date?

A: If you're a micro business, we'll back-date changes for a maximum of 12 months from the date we receive a valid VAT Certificate.

For all other customers, we'll apply the reduced VAT rate from the date we receive your new VAT certificate.

I’m moving out soon. Do I need to complete a VAT Certificate?

A: You'll need to complete and return a VAT Certificate for your current premises. We'll update your account and re-bill all charges back to a maximum of 12 months from the date we receive your VAT Certificate to the date we stop supplying your energy. We aim to do this within 28 days.

If your new premises qualify for a reduced VAT rate, you'll need to submit, or post a new VAT Certificate.

Will I need to submit a new VAT Certificate periodically?

A: Not unless the situation changes. You'll need to submit a new VAT Certificate if:

  • The qualifying percentage of gas and/or electricity use changes
  • You move premises
  • You change energy supplier
Where can I get more information about VAT on business energy?

A: You can find more information on the HMRC website.

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