5% VAT Certificate

What businesses can get reduced VAT?

You can get the reduced rate if your energy is used for domestic or charitable purposes. Such activities are described as ‘qualifying use’ and include, for example, supplying care homes for disabled and elderly, student accommodation, and children’s homes, or providing non-business services like free daycare for people with disabilities. That’s why most charitable and non-profit organisations are eligible for the 5% VAT.

Other examples of non-business activities that can qualify your business for rate reduction are:

• receiving money in the form of voluntary donations

• getting grants

• providing services for free

If you take money for the services your organisation offers you will be classed as business use and you will have to pay the standard rate of 20%, even if the profit you make goes to charity.

To qualify for VAT rate reduction an organisation has to prove that it’s registered with the Charity Commission for England and Wales, or that is has been recognised as a charity by HM Revenue & Customs (HMRC) for tax purposes. 

Other ways to get VAT reduction

Business users can also get a reduced VAT rate if the supply of electricity and gas to the site does not exceed certain usage rates. If during a billing period, on average, you use less than 1000kWh per month of business electricity and less than 4,390 kWh of business gas, you will qualify for the reduced rate of 5% VAT. If that’s the case you should get the lower VAT rate automatically, without the need to officially certify it.

Download and complete the VAT declaration form and submit a ticket or email to billing@niccolo.co.uk