Both electricity and gas are subject to VAT
When you get your monthly electricity bills, your provider will likely have added onto your bill your supplier’s usual VAT for your gas or electricity usage. Even if you don’t use much of either type of energy, you can still be eligible for some relief. Non-profit organisations cannot always reclaim VAT back. This makes it very important for an individual business owner to carefully select the most appropriate energy supplier as well as the best available gas or electricity option for them. This article will help you find the right choice for you and your company.
You can usually reduce the size of your domestic allowance by selecting devices that are more efficient. For example, you may want to purchase a home fridge rather than one designed for domestic purposes. To calculate your domestic allowance, you need to multiply your annual consumption by the current vat rate of your chosen energy supplier. The number that you arrive at will depend on your personal circumstances and your company’s specific needs. If you work in a small office and only use your fridge for occasional family occasions, it would probably be a good idea to get a smaller appliance. However, if you run a large office, then you may consider getting a larger fridge suited specifically for commercial purposes.
domestic appliances reduced VAT rate
Most domestic customers can also benefit from a reduced VAT rate when they buy their appliances. Certain energy suppliers offer domestic appliances reduced VAT rate during the grace period that follows a purchase. This can save you and your company money. In the longer term, of course, a reduced VAT rate on a variety of domestic devices can save your company even more money on its VAT costs.
Of course, a domestic appliance can also benefit from a reduction in the rate of taxation if you use it exclusively for domestic purposes. How? Suppose that you purchased a fridge specifically because it could cater for your family’s food shopping needs and in return it was intended solely for domestic purposes. In this instance, the appliance would probably be classed as a personal consumption item and therefore, its tax rate would be lower than a more standard domestic appliance. It is important, however, that you are absolutely sure of the fact that your fridge is actually suitable for domestic purposes before you make such an investment.
VAT relief on electricity
If your supplier provides you with the correct information and you do not have any other reason for thinking otherwise, then you should ask the VAT authority for advice on its taxation. VAT is not applied to electricity and gas supplies. However, you could be liable to be charged tax if you are thinking of using them for domestic purposes, which means that you should check with your tax authority before making your purchase.
On the plus side, you will find that using a domestic fridge is likely to save you money on your monthly bills. The best thing about VAT relief on electricity and gas is that it can help you obtain reductions on your VAT bill if you are able to prove that the items bought are suitable for domestic use and that they are used for that purpose only. It is always advisable to carry out this kind of inspection before you make any purchase. The only other option available is to get a professional. This will ensure that the purchase is carried out as per the regulations and you do not end up being a victim of VAT fraud.