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Guide to VAT on Energy Bills for Charities

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There are potentially thousands of charities all across the UK that are paying too much for their energy bills. Energy suppliers usually treat charities like small businesses when it comes to energy bills, but wrongly so. Unlike small businesses, charities are entitled to certain discounts on their energy bills.

VAT Reduction and CCL Exemption for Charities and Non-Profits

Charities and non-profit organisations are entitled to a VAT reduction, from 20% down to 5%, on energy used for ‘non-business’ purposes, as well as exemption from the Climate Change Levy (CCL)*, which also reduces bills by 5%. Unfortunately, suppliers do not automatically apply these discounts where relevant, and so many UK charities end up paying significantly more, usually around 20% more, for their energy.

A recent study showed that over a third (37%) of charities did not know they could claim a reduced rate of VAT and CCL exemption, and even more (74%) were unaware that rebates for overpayments can be claimed as far back as 2009. The good news is that it’s not too late to take action.

Does my business qualify for the charity VAT discount?

All of the following businesses may be eligible for reduced VAT and CCL exemption:

  • Charities (registered or unregistered)
  • Non-profit organisations
  • Village halls, sports clubs, community centres, etc.
  • Free schools and academies
  • Care homes
  • Businesses using less than 4,397 kWh/month of gas or 1,000 kWh/month of electricity.

How can charities apply for the discount?

Those eligible for exemptions or rebates will need to fill out a VAT Declaration form, which can be obtained from suppliers, or downloaded online – click here to find a full list of links to the appropriate forms. Upon receiving a VAT Declaration form, suppliers usually take around 14 days to review the application.

For more information on VAT discounts or CCL exemption, give UKPower.co.uk a call on 0800 140 4692.

* Successful application for VAT reduction automatically grants exemption from the Climate Change Levy: currently 0.188p per kWh for gas and 0.541p per kWh for electricity.

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