Saving on VAT for Fuel and Power

Saving on VAT for Fuel and Power

Charities can be eligible to pay a reduced rate of VAT for their fuel and power supplies. They may also be excluded from the Climate Change Levy. If you use energy for a "qualifying use" you could save 15% on your fuel and power costs. Qualifying use is defined as: 1. supplied for use in a dwelling or certain other types of residential accommodation, such as a children’s home, hospice or care home for elderly or disabled people or 2. supplied for use in charitable non-business activities, such as free day care for disabled people

Partial Exemption

It may be that only some of your activities come under the qualifying use. However, if some of the fuel and power you get is used partly for a qualifying use, your supplier should apportion the VAT appropriately. You should provide the supplier with a certificate declaring the percentage of the fuel and power that will be used for a qualifying purpose. In addition, deliveries of certain small quantities of fuel and power are automatically treated as being for a qualifying use. For example electricity supplied at a rate not exceeding 1,000 kilowatt hours a month, or a delivery of not more than 2,300 litres of gas oil will qualify for the reduced rate whatever the use of the building.

Climate Change Levy

If your activities meet the requirements for reduced VAT for fuel and power, your charity will also be excluded from the Climate Change Levy. Find out more about how to save VAT on your charity''s energy bills at the HMRC website: Click to visit the HMRC webste at