I’m a residential (domestic) customer and would like to understand how VAT & CCL applies to me
Domestic use of energy qualifies for reduced rate of VAT, which is currently at 5%. CCL isn't charged on any domestic use of energy.
My energy supply is for accommodation but isn't a house/flat. Does the same rule apply?
Domestic use doesn't only cover dwellings, it also includes certain types of residential accommodation (excluding hospitals, prisons or similar institutions, hotels or similar establishments).
Armed forces residential accommodation
Homes providing care for elderly/disabled, dependence on alcohol/drugs or people with mental disorder
Monasteries, nunneries and similar religious communities
School and university residential accommodation for students or pupils
Self-catering holiday accommodation
I’m a business customer, but use small amounts energy. Do I benefit from a reduction in VAT & CCL?
Yes, businesses which use small amounts of energy are classed as “de minimis”. You'll fall under domestic use, even when the supply is to a business customer. This means that they will automatically be subject to VAT at 5% and will be excluded from CCL (no requirement to produce a certificate).
What does “de minimis” mean?
The following rules apply to each premises. Please note that we are required to take into the account of all meters on one premises when determining whether or not the de minimis rules should be applied.
De minimis means supplies of not more than an average rate of 33 kWh per day (1,000 kWh per month) of electricity at one premises are subject to VAT at the reduced rate.
De minimis means supplies of not more than an average rate of 5 therms or 145 kWh per day (150 therms or 4,397 kWh per month) of piped gas at one premises are subject to VAT at the reduced rate.
The de minimis calculation is applied by looking at the average unit consumption for each individual billing period and as such, it is possible to be de minimis in some periods and not others.
The premises are used partly for residential accommodation and partly for business purposes. What rate of VAT should apply?
If the premises are used for a mixture of business purposes and residential accommodation then the VAT and CCL would be apportioned between the two (i.e. reduced rate for the portion that qualifies and standard rate for the rest). If more than 60% of the energy relates to the accommodation element then the whole supply is subject to VAT at the reduced rate (and excluded from CCL).
In order to obtain this relief, you must send a completed VAT certificate to us. The form can be downloaded here
Please note - Acceptance of this form automatically results in a proportionate reduction in the CCL that you pay.