Charity Energy Rates: 15% VAT Savings On Charity Electricity & Gas

A Charity Energy Guide On Discounts, Rates, And Suppliers

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How Much Could You Save On Your Charity Gas & Electricity?

Many UK charities, churches and non-profits often pay too much for their energy needs. Similar to domestic and business customers the best way to save money is to compare gas and electricity prices.

Businesses normally have to pay the normal rate of VAT (20%) on business energy. However, charities can benefit from an additional 15% VAT savings compared to businesses, if they qualify for fuel and power VAT relief.

Thus paying only 5% VAT instead of 20% VAT.

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How Can I Get Cheaper Energy For My Charity?

If you are eligible to apply for discounts on your charity energy bills, the VAT relief and CCL exemption, are a great place to start.

Instead of paying the standard 20% on VAT, you could be paying 5% instead, and putting the rest of the money to other areas of your charity. The CCL exemption gives specialised energy rates, which are reviewed in April every year.

According, to GOV.UK to qualify for 5% VAT, your charity must use the energy for:

Charitable non-business activities (for example, free daycare for the disabled)
Residential accommodation (for example, a children’s home or care home for the elderly)
Small-scale use (up to 1,000-kilowatt hours of electricity a month or a delivery of 2,300 litres of gas oil)

If less than 60% of the fuel and power is for something that qualifies, you’ll pay the reduced rate of VAT on the qualifying part and the standard rate (20%) on the rest. Note this does not include vehicle fuels.

What To Do If Your Charity Has Been Overcharged On Energy Bills

According to an HMRC statement published on the ITV website:

If a charity believes it has been charged the wrong rate of VAT on a supply of fuel and power, or that it has been charged CCL, it should contact its supplier and request a refund. Please note that charities can only reclaim up to 4 years of bills.

The article also talks you through the whole process on how to get a refund.

How To Claim VAT Relief On Electricity & Gas?

It would be nice if all business energy suppliers were set up to handle charities and non-profits, but the truth is many smaller suppliers may not be aware of the VAT relief available to charities.

So the first thing you should ask when getting electricity and gas quotes is if they can easily charge you the lower rate of VAT on your energy bills.

Assuming they can, they will then need some proof that you run a charity, church and/or non-profit and that your activities fall within one of the categories above. Again according to Gov.UK

To get VAT relief you must give your supplier the following:

Evidence that you’re a charity (Charity Commission registration number or Letter of recognition from HM Revenue and Customs (HMRC)).
A written declaration or ‘certificate’ confirming that you’re eligible for the relief.

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What Is CCL Exemption?

CCL stands for climate change levy. And as well as saving 15% on VAT wasn’t good enough, the government also exempts charities engaged in non-commercial activities from Climate Change Levy (CCL) charges. As of 1 April 2023, these charges were:

Electricity: 0.775 p/KWh
Natural Gas: 0.672 p/KWh (increasing to 0.775 p/kg on 1 April 2024)

LPG: 2.175 p/kg

The CCL Exemption rates above are updated in April every year.

Is My Charity Eligible For VAT Relief And CCL Exemption?

It is always worth checking whether your charity is eligible for any discounts, as the money saved can be put to better use in different areas of the cause.

List Of Businesses Eligible For VAT Relief and CCL Exemption

If you own, run or work for any of the following you should at least ask your supplier about VAT relief and CCL exemption:

Charity
Church
Other Non-profit
Village hall
Sports Club
Community Centre
Free school or academy
Care home
Student accommodation
Monastery / Nunnery
Self-catering holiday accommodation

And if you’re looking for a new supplier, you can get a free energy quote today.