Reduced VAT rate on Utilities for Museums, Charities and Not-for-Profit organisations

There are potentially thousands of Charities and Not-for-Profit organisations across the UK too paying too much for their energy bills. Energy suppliers usually treat charities like small businesses when it comes to energy bills, but that’s wrong. Unlike small businesses, charities are entitled to certain discounts on their energy bills.

VAT Reduction and CCL Exemption for Charities and Non-Profits

Charities and non-profit organisations are entitled to a VAT reduction of 15% taking the payable rate down to 5%. This is for energy used for ‘non-business’ purposes and many organisations will find they qualify for the full reduction.

The Good News is that any organisation qualifying for the VAT reduction will automatically be exempt from the Climate Change Levy (CCL). That’s significant because CCL has risen significantly over recent years and is added to every gas and electricity bill.

You can see the rates below. Electricity has slightly dropped recently, and is now fixed for the next 3 years, whereas gas has risen significantly.

Time period Natural gas Electricity
1 April 2016 to 31 March 2017 0.195p/kWh 0.559p/kWh
1 April 2017 to 31 March 2018 0.198p/kWh 0.568p/kWh
1 April 2018 to 31 March 2019 0.203p/kWh 0.583p/kWh
1 April 2019 to 31 March 2020 0.339p/kWh 0.847p/kWh
1 April 2020 to 31 March 2021 0.406p/kWh 0.811p/kWh
1 April 2021 to 31 March 2022 0.465p/kWh 0.775p/kWh
1 April 2022 to 31 March 2023 0.568p/kWh 0.775p/kWh
1 April 2023 to 31 March 2024 0.672p/kWh 0.775p/kWh

Unfortunately, suppliers do not automatically apply these discounts where relevant, and so many UK charities end up paying significantly more than they should for their energy.

A recent study showed that over a third (37%) of charities did not know they could claim a reduced rate of VAT and CCL exemption, and even more (74%) were unaware that rebates for overpayments can be claimed as far back as 4 years. The good news is that it’s not too late to act.

Be Aware: you may think you are benefitting from the VAT reduction and the CCL Exemption, but many suppliers fail to apply it. This often happens after changing supplier or renewing your contract with the same supplier! 

Do you think you qualify for reduced rate VAT and the CCL exemption?

Ask the Energy Action Group to help you find out. We will check your status, and if you qualify, we will help you get registered, and even work with you to get a full refund for up to 4 years prior.

Do you need help in establishing your current status?

Contact the EAG for help. AIM members can take advantage of the AIM Energy Action group at anytime and can get a free, no obigation quote. Find out more about the scheme here>>

Which organisations qualify for the Charity VAT discount?

 All of the following organisations may be eligible for reduced VAT and CCL exemption:

  • Charities (registered or unregistered) Non-profit organisations
  • Village halls, sports clubs, community centres, etc.
  • Free schools and academies, museums
  • Care homes
  • Businesses using less than 4,397 kWh/month of gas or 1,000 kWh/month of electricity

You can find the full list of types of qualifying organisations at the foot of this page: here>>

Contact the EAG by email on hello@eaguk.org, or call 01256 976 808.