In addition to the de minimis level of energy consumption, there are other situations where you may pay reduced VAT on gas and electric bills. These include:
- At least 60% of your business’s energy is used as household energy.
- Your business is a charity or not-for-profit organisation.
- Business premises that are also the place of residence for 90% of the people inside, such as student accommodation, places of rehabilitation and care homes.
- Places of business that are also your home.
- Self-catering holiday accommodation.
- Free schools and educational academies.
- Places of worship, such as nunneries and monasteries.
Most businesses only partly qualify for the reduced rate and are therefore best suited to a ‘mixed use’ deal. Put simply, this allows your business to pay a lower rate on the parts of your business which qualify, while the rest pays the standard 20% charge. To qualify, you’ll need to discuss this with your provider or the energy expert in charge of your price comparison.
Finally, you are not able to claim back VAT on gas and electricity bills. Despite the fact it is a business to business purchase, it is not a part of the government’s list of VAT exemptions. That’s why it’s important to use energy experts like USwitch For Business to ensure you access whatever reductions are available.
It’s also worth knowing that you don’t pay VAT on business rates, council tax, wages and a host of other expenses that are outside the scope of VAT.
Can claims for VAT be backdated?
If you think you’ve been paying more VAT on business gas and electricity than you should have been, then you can make a backdated claim for up to four years’ payments. If you do get a refund, this will be for the difference between the discounted and standard rates of VAT for the period you’re claiming for.
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