Is my business eligible for 5% VAT on energy?

Last reviewed 2 September 2026 by Utilities Made Simple · independent, whole-of-market, supplier-paid — how we are paid

Route 1 — de minimis (low usage)

If your average consumption is no more than 33 kWh a day of electricity, or 145 kWh a day of gas, the whole supply is treated as domestic for VAT. This catches a lot of small shops, salons, single-room offices, village halls and holiday lets. It applies automatically in principle, but in practice suppliers often need telling.

Route 2 — charity or non-business use

Charities, community amateur sports clubs and similar bodies qualify on the proportion of energy used for non-business activities. A church hall used for worship and community groups is non-business; the same hall hired out commercially is not. You declare the split.

Route 3 — 60% or more domestic use

Care homes, residential children's homes, student accommodation, hospices, monasteries, caravan parks and self-catering holiday accommodation commonly qualify here. At 60% or above, the entire supply is charged at 5%. Below 60%, only the domestic proportion qualifies — which is still worth claiming.

How to claim it

Complete your supplier's VAT declaration form — usually one page, naming the site, the qualifying route and the percentage. Send it to the supplier, not to HMRC. Keep a copy, and diarise a re-check if your circumstances change, because a lapsed declaration is one of the more common reasons a bill suddenly jumps.

Our 5% VAT and CCL eligibility checker walks the three routes in about a minute, and the full detail is in the VAT and CCL guide.

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.