VAT and CCL Relief Checker for Business Energy

What VAT applies to business energy?

Most business energy is charged at the standard rate of 20%. Three things can bring that down to the reduced rate of 5%: low usage under HMRC's de minimis limits, supply to a charity for its non-business activities, and supply for domestic use.

There is also a temporary change worth knowing about. Qualifying electricity supplies in Great Britain are zero-rated from 1 October 2026 to 31 March 2027. Northern Ireland is not covered and stays at 5%, and gas is unchanged throughout.

Unlike most VAT, you cannot simply reclaim the difference on your return if the wrong rate was charged: the supplier has to correct the invoice. That is why checking matters.

The de minimis limits

If your average usage across the billing period is at or below the limit, the whole supply gets the reduced rate, automatically, with no certificate needed.

Fuel	Daily average	Monthly
Electricity	33 kWh a day	1,000 kWh a month
Gas	145 kWh a day	4,397 kWh a month

These are small quantities: a single-office business, a small shop or a village hall can fall under them, a busy café almost never will. The test is applied per supply, so a business with several small sites can qualify on some and not others.

The 60% rule for mixed use

Premises often mix qualifying and non-qualifying use: a flat above a shop on one meter, a church hall used partly for commercial lettings, a care home with an office wing. If at least 60% of the supply is qualifying use, the entire supply is treated as qualifying and gets the reduced rate. Below 60%, the supply is apportioned and you pay the reduced rate only on the qualifying share.

You claim it with a VAT declaration certificate, giving the percentage and how you worked it out. Keep the calculation: HMRC can ask for it.

Climate Change Levy relief

The Climate Change Levy is a separate tax on business energy, currently 0.801p per kWh on electricity and gas, rising to 0.827p from 1 April 2027. It is usually a separate line on the bill.

Automatic exclusion. Any supply that gets the reduced rate of VAT because of de minimis, charity non-business use or domestic use is outside CCL entirely.
Climate Change Agreements. Energy-intensive sectors with a CCA get 92% off on electricity and 89% off on gas, in return for meeting efficiency targets.
Other reliefs. Supplies used in certain metallurgical and mineralogical processes, and energy used to generate electricity, can also qualify.

The full CCL guide covers the rates, the reliefs and how the levy appears on your bill.

How to claim, and how far back you can go

Work out which relief applies using the checker above and your latest bills.
Ask your supplier for a VAT declaration certificate. Most publish one as a PDF. You complete one per supply, not one per business.
Send it and keep a dated copy. The supplier applies the rate from the date it processes the certificate.
Ask for a refund of past overpayments. HMRC allows claims for up to four years. State the period and the rate you should have been charged.
Escalate if needed. If the supplier refuses or does not respond, use its complaints process, then the Energy Ombudsman if you are eligible. See business energy complaints.

Getting the rate right does not make the price right. Relief reduces the tax on your bill, not the unit rate underneath it. If your contract has rolled onto out-of-contract rates, that will cost you far more than the VAT difference.

VAT and CCL questions

What VAT do businesses pay on energy?

The standard rate of 20% applies to most business supplies. A reduced rate of 5% applies where usage is below HMRC's de minimis limits, where the supply is for a charity's non-business activities, or where it is for domestic use. Qualifying electricity supplies in Great Britain are zero-rated from 1 October 2026 to 31 March 2027, and Northern Ireland stays at 5%.

What are the de minimis limits?

Electricity: 33 kWh a day on average, or 1,000 kWh a month. Gas: 145 kWh a day on average, or 4,397 kWh a month. If your average use across the billing period is at or below the limit, the whole supply gets the reduced rate automatically, with no form to complete.

What is the 60% rule?

Where a supply is used for both qualifying purposes (domestic or charity non-business) and other purposes, and at least 60% of it is qualifying use, the whole supply is treated as qualifying and gets the reduced rate. Below 60%, the supply is apportioned. You claim it with a VAT declaration certificate to your supplier.

Who is exempt from the Climate Change Levy?

Supplies that get the reduced rate of VAT because of de minimis, charity non-business use or domestic use are automatically excluded from CCL. Businesses with a Climate Change Agreement get a discount of 92% on electricity and 89% on gas. Some other reliefs exist, including supplies used in certain metallurgical and mineralogical processes.

How do I claim the reduced rate?

If you are under the de minimis limits your supplier should apply it automatically. For charity or mixed domestic use you complete a VAT declaration certificate for each supply and send it to your supplier. If you have been charged the wrong rate, you can usually ask the supplier to correct it and refund up to four years.

Can I get a VAT refund if I have overpaid?

Yes. HMRC allows claims for up to four years, and the supplier normally handles the adjustment once you send a declaration. Ask in writing and keep the dates you sent it.

VAT and Climate Change Levy relief checker