Energy charges can be complex, so we are here to simplify them. Basically, our business tariffs are divided into quarterly rates. Each tariff has several elements, which we explain here.
Standing charge
The standing charge is constant, no matter how much electricity you use. This is because there are certain fixed costs involved in providing you with electricity.
But you may be interested to know that our Business First Energy Saver contract has no standing charge.
Unit charges
Unit charges relate to the amount of electricity you actually use.
Climate Change Levy (CCL)
CCL is a government-imposed tax to encourage reduction in gas emissions and greater efficiency of energy used for business or non domestic purposes.
CCL is chargeable only on units / kWh used and not on any other component of the bill, e.g. standing charge.
Separate rates have been set for electricity and gas. These are now index-linked and therefore likely to increase on 1 April each year.
Under current legislation:
- Where VAT is charged at the standard rate, CCL (plus VAT on CCL) will usually be added to the bill
- Where VAT is charged at the reduced rate, the supply is automatically excluded from CCL
- Green energy (ie from renewable sources) is also automatically exempt from CCL.
These rules are applied automatically at the time of billing.
Where VAT is charged at the standard rate but sites are entitled to full or partial relief from CCL, you will need to submit a PP11 Supplier Certificate for each site to advise us what percentage of relief is applicable. PP11s are only available from HM Revenue & Customs (HMRC) and can be downloaded from hmrc. Please note that PP11 Supplier Certificates are not transferable between suppliers.
But you may also be interested to know that signing up to our Business First Green Saver contract exempts you from the CCL
Please contact us for more information about the CCL and how we can help you minimise its impact on your business.
Value Added Tax (VAT)
VAT is a government-imposed tax on the supply of goods and services. There are currently 2 rates of VAT applicable to supplies of electricity and gas – the standard rate and the reduced rate. On supplies used solely for business purposes, VAT will usually be charged at the standard rate.
Solely for business or non-domestic purposes but with “low usage” during a bill period, VAT will be charged at the reduced rate. The “low usage” limits are:
- Electricity – at or below 33 units per day
- Gas – at or below 145 kWh per day
Wholly or partly for domestic or charitable non-business purposes, that part of the supply qualifies for VAT at the reduced rate but you will need to complete a VAT Certificate of Declaration (available for download) to advise us what percentage of the total supply ‘qualifies’.
Where 60% or more of your use is for domestic or charitable non-business purposes the whole supply is charged VAT at the reduced rate, but your VAT Declaration must reflect the actual percentage of ‘qualifying use’.
*If you are unable to view our pdf booklet then please go to adobe.com and download adobe acrobat reader. It’s free of charge and will only take a few minutes to install.