In line with curent legislation, there are two rates of VAT applicable to the supplies of electricity and gas used for business and non domestic purposes.
- Standard rate
- Reduced rate
Where an electricity or gas supply is used wholly or partially for domestic or charitable non-business use, that part of the supply qualifies for the reduced rate of VAT. This is known as 'qualifying use.'
Examples of businesses which can qualify for reduced rate VAT on the ground of domestic use include
- Self-containned duelling such as houses or flats (applicable to pubs)
- Job-related accomodation (vicarages, manse etc)
- Monastry, nunnery or similar
- Residential accodation for Armed Forces
- Residential Homes for children, old people etc
- Hospice or palliative care
- Caravan parks / holiday accomodation
- Shower blocks
- Staff accomodation in hotels etc
- Residential accomodation in school
- Ancillary rooms used by boarders
- Landlord supplies
In addition to the domestic usage as listed above, certain other types of supply are considered to be non-business usage and charged at the reduced rate
- Charities
- Churches and other places of worship
- Village halls / community centres / leisure centres etc
- Educational establishments
Within each catorgory there are rules governing what activities are governed by the regulations, not all businesses will qualify and it is also possible to have mixed usage where a proportion of the energy bill is charged 20% for VAT and the rest is charged at 5%.
It is very important for anyone running a business or commercial or charitable activity, as listed abot to consult their accountant for advice or FREE ADVICE can be given on this subject by calling John at Phoenix Energy on 07974 387 218 or 0800 458 64 60
Now that the VAT rate has changed it is more important than ever to ensure that your organisation is paying the correct rate, particularly if you do not have provision to reclaim VAT.
All businessses using less than 12000 kWh / annum of electricity or 73200 kWh /annum currently pay rate at the reduced rate.
