Energy: Business

Question

Most businesses that are VAT registered can normally reclaim any VAT incurred on energy, so a VAT cut would not benefit them. If a business is under the VAT registration threshold – the level at which they must register for VAT - they can choose to register for VAT voluntarily which would allow them to reclaim VAT on their supplies of energy, subject to the usual rules.

Any businesses that use fuels for energy below a de minimis level are deemed to be in receipt of ‘domestic supplies’ and can therefore already benefit from the reduced rate of VAT for domestic fuel and power at 5%.