Do I need a business energy contract if I work from home?

The general rule

Ofgem says most people who work from home use a domestic energy contract rather than a business one. The test is about the supply and the premises, not whether you earn money there. A laptop and a desk in the spare room do not turn your home into a commercial supply.

When you probably need a business contract

• You have a separate meter for a shop, workshop, studio or office attached to your home.
• Your premises are classed as business premises, for example a unit, converted barn or outbuilding with its own supply.
• Most of the energy goes on commercial activity, such as a kiln, a salon setup, or a catering kitchen.
• Your supplier or landlord says the property is non-domestic, or business rates apply to part of it.
• Suppliers use their own checks to decide whether a supply is domestic or business, so if you are unsure, ask how they classify yours.

If you are unsure, ask your current supplier which type of contract fits, and look at your meter point details. See our guide to business versus domestic energy and how to find your MPAN and MPRN.

Why it matters

• Price protection. The household price cap applies to domestic customers, not business ones. There is no Ofgem cap on business energy.
• Tax. A business contract normally carries 20% VAT, while a domestic supply gets the reduced rate. For electricity in Great Britain that reduced rate is temporarily 0% from 1 October 2026 to 30 June 2027 (HMRC first said 31 March 2027; Budget 2026 extended it) (HMRC VAT Notice 701/19: fuel and power); gas stays at 5%. Climate Change Levy is charged on business supplies unless an exemption applies.
• Rights. Microbusinesses have extra protections under Ofgem rules, including access to the Energy Ombudsman.

Claiming a share of home energy costs

Claiming part of your household bill as a business expense is a tax question for your accountant, and HMRC has its own rules on what can be claimed, including a simplified flat-rate option for some self-employed people. It does not require a business energy contract. Keep a simple note of how you worked out the share.

Illustrative method: if your electricity bill is £1,800 a year and you use one room of eight for work for about a quarter of the time, you might estimate the share at 1/8 × 1/4 = 1/32 of £1,800, which is £56.25. This is only an illustration of the arithmetic; check with your accountant which method HMRC accepts for you.

Tenants and mortgages

Read your tenancy or mortgage terms before operating a business from home, as they can restrict commercial use. Energy contracts are separate from that issue.

If you move to separate commercial premises, you must set up a business contract. Moving in without agreeing one can put you on a deemed rate; see moving premises and deemed contracts.

A quick checklist

• Is there a separate meter or a separate address for the business part? If so, expect a business contract for that supply.
• Do you employ people or see customers on site? That often points to non-domestic premises.
• Has anyone, such as the council or your landlord, classed the space as business premises?
• Is your use unusually heavy for a home, for example kilns, commercial ovens or workshop machinery?

If the answer to all is no, a domestic contract is normally fine, and you keep household protections such as the price cap.

Next steps

1. Check your bill and meter: is it a domestic or non-domestic supply?
2. Ask your supplier if unsure.
3. If you need a business contract, use our new-business set-up guide.

Biz Energy is independent and not affiliated with any supplier, broker or comparison site, and takes no commission. This is general information, not legal, tax or financial advice.