Who is my business energy supplier? How to find out
Not sure who supplies your business electricity or gas? How to find your supplier by postcode, read your MPAN and MPRN, and what to do if you have just moved in.
Read article
Most UK businesses pay 20% VAT on electricity and gas. Some pay only 5%, and from 1 October 2026 some electricity is charged 0% for a limited time. Which rate you pay depends on how much energy you use and what you use it for.
This guide explains the VAT rates on business energy, the usage limits, the temporary zero rate on electricity and how to check you are not paying too much.
VAT on business energy at a glance
| Electricity | Gas | |
|---|---|---|
| Standard rate | 20% | 20% |
| Reduced rate | 5% | 5% |
| Daily limit for the reduced rate | 33 kWh | 145 kWh |
| Monthly limit for the reduced rate | 1,000 kWh | 4,397 kWh |
| From 1 October 2026 to 30 June 2027 | 0% for qualifying supplies in Great Britain | No change |
When do businesses pay 20% VAT?
The standard rate of 20% applies to most business electricity and gas. If you run an office, shop, restaurant, salon or factory and use more than the daily limits, expect 20% VAT on your bill.
If your business is VAT registered, this is often less of a cost than it looks, because you can usually reclaim VAT on energy used for your business through your VAT return. The rate matters most to businesses that are not VAT registered.
When can a business pay 5% VAT?
HMRC’s rules in VAT Notice 701/19 allow the reduced rate of 5% in two main cases.
1. Low usage (de minimis). If your average use is no more than 33 kWh of electricity a day or 145 kWh of gas a day, the supply is treated as domestic and charged at 5%. Monthly equivalents are about 1,000 kWh of electricity and 4,397 kWh of gas. Many small shops, studios and offices fall under these limits.
2. Qualifying use. Energy used for domestic purposes or a charity’s non business activities qualifies for 5%. Examples include flats above a shop, residential care homes and charity premises. If 60% or more of the energy is for qualifying use, the whole supply is charged at 5%. Below that, only the qualifying share is.
The temporary 0% VAT rate on electricity
The government has cut VAT on qualifying electricity in Great Britain to 0% from 1 October 2026, as set out in HMRC Revenue and Customs Brief 10 (2026). It was due to end on 31 March 2027, but at Budget 2026 the government said it will extend it to 30 June 2027, and VAT Notice 701/19 now shows that date.
- It applies to electricity that would normally get the 5% reduced rate.
- Standard rated business electricity stays at 20%.
- Gas is not included, so qualifying gas stays at 5%.
- Northern Ireland stays at 5% for qualifying electricity.
If a bill covers dates before and after 1 October 2026, your supplier can split it by when the energy was used, so send a meter reading for that date if you can.
How to check you are paying the right VAT
- Find the VAT line on your bill. It shows the rate and the amount charged.
- Work out your daily use. Divide the kWh on your bill by the number of days it covers.
- Compare with the limits. Under 33 kWh of electricity or 145 kWh of gas a day should mean 5%.
- Check qualifying use. If part of the premises is residential or used by a charity, ask your supplier for a VAT declaration.
- Ask for a correction. If you have been overcharged, many suppliers can backdate the correction, so ask how far back they can go.
VAT and the Climate Change Levy
The Climate Change Levy (CCL) is a separate environmental tax on business energy. According to GOV.UK, the main rate from 1 April 2026 is £0.00801 per kWh for both electricity and gas. VAT is charged on top of CCL. Supplies under the de minimis limits, and domestic or charity use, are usually exempt from CCL too.
Do energy taxes change which deal is best?
VAT and CCL are the same whichever supplier you choose, so they do not change which deal is cheapest. What does change is your unit rate and standing charge, and that is where comparing makes a difference. See typical business electricity rates and business gas prices, or read how to avoid out of contract business energy rates.
If your contract ends in the next year, our guide to business energy renewals explains when to compare. Or tell us when your contract ends using our free quote form and a trusted UK broker will compare suppliers for you.
Sources
- HMRC: VAT on fuel and power (VAT Notice 701/19)
- HMRC: Revenue and Customs Brief 10 (2026), temporary zero rate of VAT for domestic electricity
- GOV.UK: Climate Change Levy rates
This guide is general information, not tax advice. Speak to your accountant or HMRC about your own situation.
