What VAT rate applies to business energy?
Where a link is marked *, it is a partner link — we receive commission at no extra cost to you. Links without a * earn us nothing. How we make money.
In short: Business gas and electricity attract 20% VAT by default in the UK. Charities and qualifying small businesses using low energy may apply for the reduced 5% VAT rate on fuel and power if eligible under HMRC rules — domestic use in mixed premises can also affect split VAT treatment.
Last reviewed:
Reviewed by Kaiser Khan
Domestic household energy pays 5% VAT — business premises pay 20% unless you qualify for reduced rate certification from HMRC.
Mixed use — shop with flat above — may need apportionment between domestic 5% and business 20% based on meter split or floor area calculations.
Climate Change Levy adds to business energy bills unless you hold a CCL relief certificate for mineralogical or metallurgical processes, or qualify for other exemptions.
Apply for VAT reduced rate via form VAT1614A for charities and eligible small usage. See business energy explained and gov.uk VAT on fuel and power.
Primary source: gov.uk/guidance/vat-on-fuel-and-power-notice-70119
Part of our Benefits & tax
This quick answer sits inside our wider benefits & tax hub — with sub-guides, calculators and step-by-step explainers on the same topic.
Read the full benefits & tax guide →