VAT and Climate Change Levy checker

The rules this checker applies

VAT: energy supplied to a business is standard-rated at 20%. The reduced rate of 5% applies to supplies HMRC treats as de minimis — on average no more than 33 kWh a day of electricity or 145 kWh a day of gas — and to qualifying use, which means domestic use or use by a charity for non-business activities. If at least 60% of the supply is for qualifying use, the whole supply gets the reduced rate. Below 60%, only the qualifying share does.

Climate Change Levy: the levy applies to energy used by businesses at the main rate of 0.801p per kWh from 1 April 2026, rising to 0.827p from 1 April 2027. Supplies below the de minimis limits (1,000 kWh a month for electricity and 4,397 kWh a month for gas) are treated as domestic and excluded, as is domestic and charity non-business use. On mixed premises with less than 60% qualifying use, the levy applies to the non-qualifying part.

Telling your supplier about qualifying use

Suppliers don't know how you use your premises unless you tell them. If part of the supply is for domestic use — a flat above a shop, for example — or a charity uses the premises for non-business purposes, you normally need to give your supplier a VAT declaration (sometimes called a VAT certificate) so they can apply the reduced rate. Keep a note of how you worked out the split.

The temporary zero rate on home electricity

From 1 October 2026 to 30 June 2027, electricity supplied in Great Britain for qualifying domestic or charity non-business use is zero-rated for VAT instead of 5%. HMRC first set the end date as 31 March 2027; its VAT notice on fuel and power, updated on 28 October 2026, says Budget 2026 extended it by three months to 30 June 2027. Because HMRC's notice treats de minimis supplies as domestic use, small-user business electricity appears to qualify too, and the checker shows 0% for it during that period — confirm with your supplier. It doesn't change the rate on ordinary business use, which stays at 20%, and it doesn't apply to gas. If you think part of your supply qualifies, check the HMRC guidance and talk to your supplier.

When a bill seems wrong

If your bill charges 20% VAT and CCL on a supply that should be exempt, or misses a VAT declaration you sent, contact your supplier and ask them to re-bill. If they don't put it right, follow their complaints process, and if it's still unresolved after eight weeks you may be able to go to the Energy Ombudsman — see energy disputes.