Some organisations pay 20% VAT on electricity when they qualify for 0%.

Q: Which businesses qualify for a lower VAT rate on energy?

Under HMRC VAT Notice 701/19, a lower VAT rate applies to (1) small-scale supplies below the de minimis threshold, 33 kWh/day of electricity or 145 kWh/day of gas, on average, (2) energy used in qualifying residential accommodation (care homes, hostels, children's homes, monasteries, student halls), and (3) the domestic portion of mixed-use premises such as B&Bs or businesses attached to a residence. From 1 October 2026 to 31 March 2027, qualifying electricity in Great Britain is charged 0% VAT, and qualifying gas 5%. In Northern Ireland, qualifying electricity stays at 5%. Many small UK businesses qualify but pay 20% because the supplier never asked them to submit the VAT declaration.

Q: Can I reclaim historical VAT overpayments?

Often yes. If you've been paying 20% when you qualified for 5%, HMRC generally allows backdated claims for up to 4 years. We identify whether reclaim applies and support the documentation. Recoveries typically range from a few thousand to tens of thousands of pounds depending on how long you've been overpaying.

Q: How long does the audit take?

Send us a recent bill (photo or PDF is fine). Within 24-48 working hours we send a plain-English breakdown of your rate vs the market, your renewal window, VAT eligibility, and what you could save. No obligation to switch.

From 1 October 2026 to 31 March 2027, qualifying electricity in Great Britain is charged 0% VAT, and qualifying gas 5%. Care homes, low-use sites and partly residential premises may qualify.

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HMRC VAT Notice 701/19 sets out which business energy use qualifies for a lower VAT rate. Many small UK businesses qualify but are billed 20% by default because the supplier never asked them to submit the VAT declaration form.

VAT eligibility checkUp to 4 years reclaimable24-48 hour turnaroundNo credit check

Who qualifies

Who qualifies under HMRC VAT Notice 701/19.

VAT on qualifying electricity in Great Britain until 31 March 2027. Gas: 5%.

Small usageBusinesses using under 33 kWh/day of electricity or 145 kWh/day of gas (the HMRC de minimis threshold), small offices, shops, cafés, workshops.

Residential accommodationCare homes, hostels, children's homes, monasteries, student halls, and other qualifying residential settings.

Mixed-use premisesThe domestic portion of a business attached to a residence, for example a B&B, a pub with landlord accommodation, or a shop with a flat above.

In Northern Ireland, qualifying electricity stays at 5%.

What we check on every business energy audit:

1. Are you on the right VAT rate now? If you qualify for a lower rate but are paying 20%, you're overpaying every single month. We help you submit the VAT declaration to your supplier so future bills are corrected.

2. Can you reclaim historical overpayments? HMRC generally allows backdated VAT claims for up to 4 years. For an established business the recovery can run into tens of thousands of pounds.

3. Are you also exempt from CCL on the qualifying portion? Climate Change Levy doesn't apply to energy supplied at the reduced VAT rate. Same form, same evidence, two reductions on every kWh.

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Frequently asked

VAT questions.

Which businesses qualify for a lower VAT rate on energy?

Under HMRC VAT Notice 701/19, a lower VAT rate applies to:

Small-scale supplies below the de minimis threshold, under 33 kWh/day of electricity or 145 kWh/day of gas, on average.
Energy used in qualifying residential accommodation (care homes, hostels, children's homes, monasteries, student halls).
The domestic portion of mixed-use premises such as B&Bs or businesses attached to a residence.

From 1 October 2026 to 31 March 2027, qualifying electricity in Great Britain is charged 0% VAT, and qualifying gas 5%. In Northern Ireland, qualifying electricity stays at 5%. Many small UK businesses qualify but pay 20% because the supplier never asked them to submit the VAT declaration form.

Can I reclaim historical VAT overpayments?

Often yes. If you've been paying 20% when you qualified for 5%, HMRC generally allows backdated claims for up to 4 years. We identify whether reclaim applies and support the documentation. Recoveries typically range from a few thousand to tens of thousands of pounds depending on how long you've been overpaying.

How long does the audit take?

Send us a recent bill (photo or PDF is fine). Within 24-48 working hours we send a plain-English breakdown of your rate vs the market, your renewal window, VAT eligibility, and what you could save. No obligation to switch.

Start here

Find out which rate you should be paying.

Takes 2 minutes. We come back to you within 24-48 hours with your audit, including a VAT eligibility check and reclaim potential estimate.

Get your free energy audit

Takes two minutes. No credit check.

VAT

VAT eligibility check included

We confirm whether you qualify for a lower VAT rate and estimate any backdated reclaim.

Backdated reclaim assessment

HMRC generally allows up to 4 years of recovery on qualifying supplies. We check whether it applies to you.

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24-48 hour turnaround

Send a bill, get a plain-English breakdown within two working days.

No-win, no-fee

You pay nothing for the audit. We earn commission only if we save you money.