Business Energy VAT
What rate of business VAT should I be charged for my gas or electricity?
VAT for business consumers of energy is generally in line with standard VAT rates, and is normally charged at 20%. However, some businesses will meet the Deminimis requirements of using an average of 33 kWh per day, and then you would be billed at 5%.
How is VAT Deminimis applied to electricity?
Supplies of not more than an average of 33 kWh per day (1,000 kWh per month) of transmitted electricity to one customer at any one of his premises, are billed at 5% VAT. This quantitative limit applies whether the bill is based on a meter reading by either the supplier, the customer or on an estimate.
How is VAT Deminimis Applied to Gas?
Supplies of not more than an average of 5 therms or 145 kWh per day (150 therms or 4,397 kWh per month) of piped gas to one customer at any one of his premises are billed at 5% VAT. This quantitative limit applies whether the bill is based on a meter reading by either the supplier, the customer or on an estimate.
What criteria does my business need to meet for VAT to be levied at 5%?
To qualify for VAT exemption the site has to be either:
• For domestic use
• A building, or part of a building, which consists of a dwelling or number of dwellings
• A building, or part of a building, used for a residential purpose
• A home or other institution providing residential accommodation for children
• A home or other institution providing residential accommodation with personal care for persons in need of personal care by reason of old age, disablement, past or present dependence on alcohol or drugs or past or present medical disorder
• A hospice
• A residential accommodation for students or school pupils
• Residential accommodation for members of any of the armed forces
• A monastery, nunnery or similar establishment
• An institution which is the sole or main residence of at least 90% of its residents
• Except use as a hospital, a prison or similar institution, a hotel, inn or similar establishment
• Self catering holiday accommodation
• A caravan
• A houseboat
• A charity otherwise than in the course of furtherance of a business
• Where there is a supply of goods or services partly for domestic or charitable endeavours
• If at least 60% of the goods or services qualify (meet the aforementioned criteria the whole shall be treated as meeting the criteria)
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