Do charities pay VAT on energy?
Charities pay 5% VAT and no Climate Change Levy on the proportion of energy used for non-business activities — not automatically on everything. If 60% or more of the supply is non-business, the whole supply goes to 5%. Below 60%, the qualifying proportion does, and the rest stays at 20%.
Last reviewed 2 September 2026 by Utilities Made Simple · independent, whole-of-market, supplier-paid — how we are paid
Business and non-business, in this context
The test is what the energy is used for, not what the organisation is. Worship, free community groups, grant-funded charitable services and volunteer-run activity are non-business. A charity shop selling goods, a commercially hired hall, a paid-for nursery place or a cafe run for profit are business, even inside a charity.
Working out the percentage
A defensible basis and a written record matter more than precision:
- By time — hours of non-business use against total hours the building is in use.
- By area — floor area given over to each activity.
- By sub-meter — where a commercial part of the building is separately metered, which is the cleanest answer of all.
Keep the workings with the declaration. If the mix changes materially, re-declare.
What it is worth
The 15% VAT difference plus CCL at 0.801p per kWh. For a busy community building with a sizeable heating load, that is a meaningful sum, and it is reclaimable up to four years back. Village halls, churches, scout huts and community centres are the classic under-claimers — often because everyone assumed someone else had done it.
Also worth checking
Many charitable premises also fall under the de minimis low-usage route regardless of the non-business argument, which is simpler to evidence. Check both — you only need one to qualify.
Ask an energy specialist
If your question is not answered above, send it to us. A specialist answers personally, normally within one working day. No sales call, no obligation — and if the answer is "your deal is fine", that is what you will get.
Want this checked against your own bill?
Email a recent bill to info@utilitiesms.co.uk and a specialist will check your rates, VAT, levies and contract end date against the live market — free, usually the same working day. If your deal is already good, we will tell you to keep it.