De minimis
De minimis is the small-use limit below which business energy can be charged at the 5% reduced VAT rate instead of 20%.
What it is
"De minimis" means "too small to matter". In business energy it is the cut-off that lets a very low-use supply be treated like a household supply for VAT and kept out of the Climate Change Levy.
The limits
HMRC's fuel and power notice sets them as:
| Fuel | Per day | Per month |
|---|---|---|
| Electricity | 33 kWh | 1,000 kWh |
| Gas | 145 kWh | 4,397 kWh |
Stay at or under the limit and the supply is treated as domestic: VAT is 5% rather than the standard 20% (and 0% for electricity in Great Britain from 1 October 2026 to 30 June 2027, see below). Over the limit, the standard rate applies, unless another reduced-rate test (such as the 60% rule) is met.
Where you will see it
On your bill as the VAT percentage, and in the paperwork you sign with the supplier. Many suppliers ask you to sign a declaration; see the reduced-rate VAT declaration.
Why it matters
Take a small studio using 800 kWh of electricity a month. At a rate of 28p/kWh the units cost 800 × £0.28 = £224. VAT at 5% is £11.20; at 20% it would be £44.80, a difference of £33.60 a month. While the temporary zero rate applies in Great Britain, the VAT on that electricity would be £0.
Climate Change Levy
GOV.UK's guidance on CCL exemptions uses the same limits: electricity supplies below 1,000 kWh a month and piped gas below 4,397 kWh a month are treated as domestic and excluded from the levy. At the main rate of 0.801p/kWh, the studio above avoids 800 × £0.00801 = £6.41 a month.
The limit is judged per supply and over an average, so check with your supplier how they apply it. The temporary 0% VAT on electricity in Great Britain runs from 1 October 2026 to 30 June 2027 (HMRC first set 31 March 2027; Budget 2026 extended it). It covers supplies treated as domestic, which includes de minimis supplies, and charity non-business use. Ordinary business use above the limit stays at 20%. Gas is not affected.
Related terms
See the 33 kWh limit explained, which VAT rate applies and climate change levy.
Common questions on this topic
Sources
General information only. Energy prices, rules and supplier terms change; check the latest position with your supplier, Ofgem or the Energy Ombudsman before you act.