VAT and your electricity bill

How much VAT is on bills?

Generally speaking, electricity used for commercial purposes is subject to VAT at 20%. However, the actual rate you pay depends on:

how much electricity you use
what you use it for
if you are a registered charity

When the lower VAT rate applies

If, on average, you use less than 33 units of electricity a day (around 3,000 units a quarter) you will pay 5% VAT. This rule applies whether you use electricity for commercial or domestic purposes. It also applies whether your bill is based on an actual meter reading or an estimated reading.

Domestic use

If you use electricity for domestic purposes, you are entitled to pay VAT at 5%. For more information contact HM Revenue and Customs and ask for Notice 701/19. Domestic use includes:

a house, flat or self-contained dwelling
certain types of residential accommodation such as a children’s home, hospice or care home
a caravan or houseboat
self-catering holiday accommodation

The following are generally not allowed to claim the lower rate VAT:

hotels, guesthouses, B&B’s and similar establishments
prisons and similar institutions
hospitals

To claim the lower rate VAT please complete and return the VAT declaration form.

Combined commercial and domestic use (including farms)

Customers can apply to pay 5% VAT for the domestic portion of their bill. Since the meter can’t show this separately the customer must declare, as a percentage, how much electricity is for domestic use.

You must be able to show HM Revenue and Customs how you worked out this figure. If domestic use is 60% or more, VAT will be applied to the whole bill at 5%. To claim the lower rate VAT please complete and return the VAT declaration form.

Charities

Charities are generally not entitled to claim VAT at 5% unless the electricity is used for one of the domestic purposes listed. However, they may claim VAT at 5% for electricity used for providing charitable non-business activities such as free day care for people with disabilities. For more information contact HM Revenue and Customs and ask for Notice 701/1. To claim the lower rate VAT you must complete and return this VAT declaration form.

Climate Change Levy (CCL)

Climate Change Levy (CCL) applies to electricity where VAT is charged at 20%. CCL rates are set by the UK Government and certain businesses may be eligible for exemption. For the latest rates and further information, visit the GOV.UK website or contact HM Revenue & Customs and request a PP11 form.

The UK Government has recently announced changes to CCL rates from 1 April 2026, which may affect your electricity costs. For more information visit the GOV.UK website.

Rates set by UK Government

Taxable Commodity	Rate from 1 April 2023	Rate from 1 April 2024	Rate from 1 April 2025	Rate from 1 April 2026	Rate from 1 April 2027
Electricity (£ per kilowatt hour (kWh))	0.00775	0.00775	0.00775	0.00801	0.00827
Gas (£ per kWh)	0.00672	0.00775	0.00775	0.00801	0.00827
LPG ( £ per kilogram kg))	0.02175	0.02175	0.02175	0.02175	0.02175
Any other taxable commodity (£ per kg)	0.05258	0.06064	0.06064	0.06264	0.06468

Useful contact details:

Power NI:

The Consumer Council:

Floor 3 Seatem House, 28 - 32 Alfred St, Belfast BT2 8EN

0800 121 6022

[email protected]