Charity VAT on fuel and power: the 5% reduced rate and the declaration your supplier needs

Fuel and power a charity puts to non-business use is charged at the 5% reduced rate rather than the 20% standard rate, and from 1 October 2026 to 31 March 2027 qualifying supplies of electricity in Great Britain are charged at 0%. Neither rate arrives on its own. Your energy supplier charges the standard rate until you send it a signed certificate stating what percentage of the supply to each premises is qualifying use, and it applies the lower rate only from the date it holds that certificate.

What rate applies to charity fuel and power

The reduced rate of 5% applies to supplies of coal, coke, gas, petroleum gases, fuel oil, gas oil, kerosene, electricity, heat and air conditioning where they are put to qualifying use. Qualifying use has two limbs: domestic use, or use by a charity otherwise than in the course or furtherance of a business. A charity relies on the second limb for its offices, its meeting rooms and any premises it runs without charging.

The temporary change sits on top of that. On 21 July 2026 the government announced a temporary zero rate for Great Britain covering domestic supplies of electricity and other supplies of qualifying use, running from 1 October 2026 to 31 March 2027. During that window qualifying supplies of electricity in England, Scotland and Wales carry VAT at 0%. Nothing else moves. Gas stays at the 5% reduced rate, electricity in Northern Ireland stays at 5%, and the supplies that qualify for relief are unchanged. Budget for the 5% rate returning on 1 April 2027 rather than treating the zero rate as the new normal.

What counts as non-business use

HMRC's position is that where a charity makes no charge, its activities are generally non-business, and fuel and power used in those activities is taxed at the reduced rate. The test is the charge, not the charitable purpose. A hall used for free community sessions is non-business. The same hall let to a yoga teacher for an hourly fee is business use. A shop, a paid-for cafe, a car park with a tariff and paid consultancy are all business use, and the electricity they consume stays at the standard rate.

This is the same business and non-business line that governs what a charity can recover, so it is worth settling once for the whole organisation rather than separately for each question. Our guides to whether charities pay VAT and to reclaiming input VAT work through the same split from the other direction.

What the certificate has to contain

Where fuel and power goes to mixed use, the supplier needs a certificate from you declaring what percentage of the supply to each premises is, or will be, put to qualifying use. One certificate covers one premises, so a charity running four sites sends four. It must carry:

• the name, address and VAT registration number of the charity and of the supplier;
• the address of the premises being supplied;
• the amount of qualifying use expressed as a percentage of total use, given as an exact percentage rather than a range or an estimate such as "mostly";
• a declaration signed and dated by a responsible officer, confirming the charity understands it must notify the supplier if the position changes.

Anyone providing an incorrect certificate may be liable to a financial penalty, so the percentage needs a basis you can show: floor area, metered sub-circuits, hours of use by activity, or whatever genuinely reflects the building. Keep the working with the certificate. If the mix changes, because a room starts being let or a paid service closes, tell the supplier and issue a fresh certificate rather than leaving the old percentage running.

How the 60% rule changes the answer

If at least 60% of the fuel or power is supplied for qualifying use, the whole supply is treated as qualifying and the reduced rate applies to all of it. Below 60%, the supplier apportions, charging the reduced rate on the qualifying share and the standard rate on the balance.

The threshold rewards measuring rather than estimating. A charity that declares 55% gets the reduced rate on 55% of the bill. A charity that measures the same building properly and finds the true figure is 62% gets the reduced rate on the whole bill. Where a meter looks close to 60%, work the split out from floor area, sub-metering or hours of use before you put a figure on the certificate.

When you do not need a certificate at all

Small supplies are deemed domestic use and get the relief automatically. The limits are 1,000 kilowatt hours of electricity a month, 150 therms or 4,397 kilowatt hours of piped gas a month, 2,300 litres of fuel oil, gas oil or kerosene, and one tonne or less of domestic grade coal or coke. A small hall or a single-room office often sits inside these limits on both meters, in which case the correct rate should already be on the bill and no certificate is required. Inside the window that means 0% on a small electricity supply in Great Britain and 5% on gas. Check a bill before assuming a certificate is missing.

Who cannot use the relief

The relief turns on use by a charity, so an organisation that is not a charity is outside it however social its purpose. A community interest company pays the standard rate on its fuel and power, as it does on the other reliefs written around charities; our comparison of a CIC and a charity sets out where that line falls. A charity's trading subsidiary is likewise a separate company carrying on a business, so its own supplies are standard-rated even though its parent qualifies. Where a charity and a subsidiary share a building on one meter, the subsidiary's share is business use and belongs outside the qualifying percentage.

What to do this quarter

Pull the most recent gas and electricity bills for every premises and read the VAT rate actually charged. Where it is 20% and the site is mostly non-business, that is a certificate you have not sent. Work out the qualifying percentage with something you can evidence, send a certificate for each premises, and ask the supplier to apply the correct rate going forward. Overcharged VAT can be corrected by the supplier for past periods under the normal time limits, so have the percentage and the claim period checked before you approach them, with the calculation behind the figure written down.