LED lighting for business: savings, payback and what to check

Lighting is on for most of the working day in almost every business, which makes it one of the easiest energy costs to cut. The government’s Building Energy Efficiency Survey found internal lighting was the largest single use of electricity in non-domestic buildings in England and Wales. LED technology and simple controls can take a large share of that cost away, often with a payback measured in a few years.

How much can LED lighting save a business?

The Carbon Trust says upgrading from conventional lighting such as halogen, metal halide or old T12 fluorescent tubes to LED can cut lighting electricity by up to 80%. Savings from upgrading more efficient T8 tubes or compact fluorescents are smaller, but it says they still give a good return.

Other published figures point the same way:

• The Carbon Trust’s 2019 guidance says LED upgrades typically lead to a reduction in energy use of more than 65%.
• The government said in 2021 that LED bulbs produce the same light as halogen bulbs but use up to 80% less power and last five times longer.

How much of your bill that represents depends on your business. The Carbon Trust’s lighting guide says lighting can be as little as 5% of energy use in heavy industry and 50% or more in a retail store with older lighting.

How long does LED lighting take to pay back?

Across more than 1,000 LED projects it supported, the Carbon Trust found an average simple payback of under 2.5 years. It has also said that where lights run continuously, paybacks are often close to one year, while offices with 3,000 or more hours a year can still see a return in under five years.

The more hours your lights are on, the faster the payback. A warehouse lit around the clock recovers its costs much faster than a small office used for eight hours a day.

How do LED fittings compare with older lighting?

The Carbon Trust compared the annual running cost of single fittings in three common situations. Its figures used older electricity prices (10p per kWh for the warehouse example and 12p for the offices), so the pounds are out of date, but the comparison between technologies still holds.

Situation	Old fitting	More efficient fluorescent	LED	LED cost as a share of the old fitting
Warehouse or production, running 24/7	400W metal halide: £385	220W T5: £212	150W LED: £131	About 34%
Office, 5-foot strip lights, 12 hours a day, 5 days	2x58W T8: £50	2x49W T5: £39	48W LED: £20	About 40%
Office, 2-foot square panels, same hours	4x18W T8: £32	3x14W T5: £17	30W LED: £11	About 34%

Shares are our calculation from the Carbon Trust’s figures. Its fluorescent figures include losses in the control gear (20% for T8 and 10% for T5 and discharge lamps).

Worked example: what would an LED upgrade save you?

This example uses the Carbon Trust’s office strip light comparison with today’s prices. The figures are illustrative. Use your own fitting count, hours and unit rate.

Inputs

• 40 twin 5-foot T8 fittings (2 x 58W). With 20% control gear losses, each draws about 139W.
• Replacement: 40 LED fittings at 48W each.
• Hours: 12 hours a day, 5 days a week, 52 weeks = 3,120 hours a year.
• Price: 28.76p/kWh, the DESNZ average for small non-domestic electricity users in Q1 2026, before VAT.

Calculation

	Old T8 fittings	LED fittings
Energy a year	40 x 139.2W x 3,120h = 17,372 kWh	40 x 48W x 3,120h = 5,990 kWh
Cost a year	£4,996	£1,723

Saving: 11,382 kWh and about £3,273 a year, a 66% cut in lighting electricity.

To pay back within the Carbon Trust’s average of 2.5 years, the whole project would need to cost less than about £8,180 (2.5 x £3,273). Divide any quote you get by your annual saving to find your own payback.

You can run the same sum for a single fitting or piece of equipment with our equipment running cost calculator.

Should you replace the tubes or the whole fitting?

It is possible to fit LED replacement tubes into existing fluorescent fittings, or swap halogen GU10 spotlights for LED versions. The Carbon Trust says this saves energy but is less effective than full replacement, because older fittings and control gear are not designed for an LED light source and the performance of the unit as a whole can’t be verified.

Its recommendation is to replace the entire luminaire. That makes sure the new fitting has the right wiring and control gear, and that the right amount of light is provided for the space.

Are fluorescent tubes being phased out?

Yes, for most traditional types. The government’s lighting rules phased out most remaining halogen bulbs from September 2021 and traditional fluorescent tubes, which are common in offices, from September 2023 onwards. Some fluorescents, such as T5 tubes, remain on the market.

The rules control what can be sold. They don’t require you to remove lights that are already fitted, but if you rely on affected tubes, it makes sense to plan the switch rather than wait for fittings to fail.

The government consulted in 2023 on tighter efficiency standards for lighting sold in Great Britain from 2023 and again from 2027. As of September 2026, the consultation page says the outcome has not yet been published.

Do lighting controls save more?

Yes. The Carbon Trust says lighting controls usually cut lighting energy by 30 to 50% in a typical office. However efficient a light is, it wastes money if it is on in an empty room. There are three main types:

• Occupancy sensors switch lights off when a space is empty. The Carbon Trust says they can save up to 30% on lighting costs, especially where cleaners or staff work late. With “absence detection”, people switch lights on and the sensor switches them off. The Carbon Trust suggests it for single offices and meeting rooms.
• Daylight sensors dim the lights as daylight increases. The Carbon Trust prefers dimming to switching, so light levels don’t suddenly drop.
• Time controls still matter outside, so exterior lights only run when it is dark.

It also recommends keeping manual override switches that are easy to find and clearly labelled.

Type of space	Examples	Controls the Carbon Trust suggests
Owned by one person	Single office, small workshop	Wall switch plus a movement sensor, preferably in absence mode
Shared	Open-plan office, production area	Wall switches, movement sensors and daylight sensors
Temporarily owned	Meeting room, classroom	Wall switch or scene plate plus movement sensors, preferably in absence mode
Occasionally visited	Store room, toilet	Wall switch with a time delay, or a movement sensor
Unowned	Corridors, stairs	Automatic operation with movement sensors

What else should you check before you upgrade?

Use this checklist when you ask for quotes:

• Count what you have. Number of fittings, wattage and hours on, area by area.
• Right light, right place, right time. The Carbon Trust’s three rules of good lighting design. Less light is needed in a corridor than at a desk.
• Light output and efficiency. Ask for lumens per watt (efficacy) for each fitting.
• Lifetime. LED life is usually quoted as L70, for example L70 40,000 hours, meaning output falls to 70% of the original after 40,000 hours.
• Colour rendering. The Carbon Trust says a rating of 80 or above is good for most places where people work.
• Controls. Build sensors and daylight dimming into the quote, not as an afterthought.
• Regulations. New buildings and major refurbishments must meet the Building Regulations on energy use (Part L in England and Wales). The Health and Safety Executive’s guide HSG38, Lighting at work, covers minimum lighting.
• Clean what you keep. The Carbon Trust says light levels can fall by up to 30% in two to three years without cleaning.

LEDs also bring savings beyond the meter. The Carbon Trust points to longer lamp life, which means less maintenance, and lower heat output, which reduces the need for cooling in warm weather.

Is there funding or tax relief for LED lighting?

Grants depend on where you are. As of September 2026, lighting is an eligible measure under Scotland’s SME Loan Scheme, which offers interest-free loans with cashback, and LED lighting is listed as a typical project under the Development Bank of Wales Green Business Loan Scheme. Our grants guide has the details for each nation.

On tax, most plant and machinery qualifies for the Annual Investment Allowance, which lets you deduct the full cost from profits before tax up to £1 million. Check with your accountant how it applies to your project. Older guides mention Enhanced Capital Allowances for energy-saving products: these ended in April 2020.

For more ways to cut costs, see our guide to reducing business energy costs, or start with an energy audit to find where your lighting is on when it doesn’t need to be.

Frequently asked questions