# Business energy contracts explained for UK firms

> Bills & utilities · Last updated 5 July 2026

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## Quick answer

Business energy is not protected by the domestic Ofgem price cap — micro-businesses get some contract protections but must compare unit rates, standing charges, VAT at 20%, climate levy and rollover clauses. Notice periods and deemed rates after contract end are costly traps.

Comparison sites quote business gas and electricity separately from household tariffs. Contract law differs — rollover and auto-renewal rules were tightened for micro-businesses but larger firms negotiate bespoke deals. This hub explains fair comparison for shops, offices and home-based traders.

## Key facts

- Domestic price cap does not apply to business contracts
- Micro-businesses: fewer than 10 employees and turnover under €2m get enhanced switching protections
- Business electricity VAT is 20% — charities and some nurseries may qualify for 5%
- Deemed out-of-contract rates after expiry are far above negotiated deals
- Half-hourly meters suit larger consumption with time-of-use pricing

## Micro-business vs larger contracts

Micro-businesses can switch with shorter notice and receive clearer renewal statements under Ofgem rules.

Larger firms negotiate bespoke contracts — broker access may help but fees apply.

Home-based businesses using domestic supply must sometimes move to business tariffs if usage is commercial — check supplier rules.

## VAT, levies and climate charges

Standard 20% VAT applies to business energy unless qualifying for reduced rate — childcare, charities and some religious buildings may qualify.

Climate change levy appears on business bills — climate change agreements can reduce levy for eligible industries.

Compare p/kWh and daily standing charge using annual kWh from prior bills.

## Contract end and switching

Mark contract end dates — deemed rates apply if you do nothing. Renewal windows open weeks before expiry.

Fixed business contracts may have volume tolerance clauses — exceeding expected use can trigger penalties.

Green business tariffs certify renewable matching — useful for ESG reporting but verify certification scheme.

## Frequently asked questions

### Can I use domestic energy working from home?

Light home working on a domestic tariff is often fine. Heavy business use may require a business meter and tariff — ask your supplier.

### Is there a business price cap?

No domestic-style cap. Micro-business protections focus on contract clarity and switching — not maximum unit rates.

### Do I need a broker?

Optional for micro-businesses on comparison sites. Larger multi-site firms often use brokers for volume pricing.

## Primary source

https://www.ofgem.gov.uk/information-consumers/energy-advice-businesses

## Related

- [Compare energy tariffs](https://moneyguide.org.uk/bills-utilities/compare-energy-tariffs-guide/)
- [Self-employment basics](https://moneyguide.org.uk/work-earnings/self-employment-basics/)
- [Energy switching guide](https://moneyguide.org.uk/bills-utilities/energy-switching-guide/)

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Independent UK money guidance from [Money Guide](https://moneyguide.org.uk). Information only — not regulated financial advice.