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How VAT and Climate Change Levy (CCL) Are Assessed

We assess VAT and the Climate Change Levy (CCL) based on energy consumption across a premises. In line with HMRC guidance, this includes considering consumption across all relevant meters at the same premises to ensure the correct VAT and CCL treatment is applied.

How are VAT and Climate Change Levy (CCL) applied to my energy supply?

VAT is normally charged on gas and electricity at 20%, unless it is for domestic or non-business use, in which case a reduced rate of 5% applies.

UK tax rules include de minimis thresholds, which assume that low consumption is domestic. Where usage is below these levels, reduced VAT applies and CCL is not charged.

What are the de minimis thresholds?

Electricity: 1,000 kWh per month

Gas: 4,397 kWh per month

Usage above these thresholds is subject to the standard rate of VAT (20%) and CCL.


How is consumption assessed for VAT and CCL?

HMRC guidance requires the de-minimis thresholds for VAT and CCL to be assessed based on total consumption across all relevant meters at a premises.

Where a business has multiple meters at the same premises, their combined consumption may therefore affect the VAT and CCL treatment applied.

FAQs

We've reviewed how VAT and CCL had been applied across customer accounts. Where combined consumption at a premises exceeded the de minimis thresholds, the standard rate of VAT and CCL should have been applied.

Over the past 12 months, Brook Green Supply has held a number of discussions with HMRC on the application of its guidance, including how it should be applied in practice across energy industry site and meter point structures. We have also obtained independent advice to support our approach.

HMRC rules require suppliers to correct historic tax treatment for up to four years. As a result, some customers have received or will receive supplementary invoices for additional VAT and CCL covering the period:

1 July 2021 to 31 July 2026

For August 2026 consumption onwards, the correct VAT and CCL treatment will be applied as part of affected customers’ regular billing.

 

 

HMRC defines a premises as: 

“A building or collection of buildings in close geographical proximity, owned or occupied by one customer within a defined boundary on one site, where each building serves the other in some necessary or reasonably useful way.” 

For practical purposes, we treat all meters contracted to the same customer within a single postcode as part of the same premises.

Relevant HMRC guidance is available here:

https://www.gov.uk/hmrc-internal-manuals/vat-fuel-and-power/vfup3100


Yes, supplementary invoices that only contain VAT adjustments (often referred to as VAT-only invoices) can usually be processed through standard accounting systems.

Yes, several other industrial and commercial energy suppliers have undertaken similar reviews to ensure compliance with VAT and CCL regulations. 

We have also obtained independent advice from one of the Big Four accounting firms, which confirmed that this approach is fully aligned with current UK tax legislation.

While we cannot provide tax advice, the issuance or reissuance of an invoice should create its own tax point, and therefore the time limit for recovering input VAT on these invoices should be four years from the new invoice issuance date. 

If you believe that meters within the same postcode should not be treated as a single premises, please contact us.

We are happy to review cases where customers can provide clear evidence that multiple separate premises exist within the same postcode.

Where the de minimis thresholds apply, VAT and CCL are assessed based on combined consumption across all relevant meters at a premises. 

For August 2026 consumption onwards, VAT and CCL will be applied based on this assessment as part of customers’ regular billing. This means you may see a change in the VAT rate or CCL applied to your invoices, even if you have not received a supplementary invoice for historic charges.

While any customer could be impacted, the following groups are more commonly affected:

  1. Public EV charge point owners or operators

  2. Landlords or property management companies managing multi-occupancy sites (for example shopping centres or shared office buildings)

  3. Sites with backup energy supplies or multiple meters

The most recent HMRC guidance confirms that the de minimis thresholds do not apply to electricity supplied to public EV charging points, because these supplies are not considered domestic use.

As a result: 

  • Electricity supplied to public EV chargers is always subject to standard VAT (20%)

  • CCL also applies

Relevant HMRC guidance is available here:

https://www.gov.uk/hmrc-internal-manuals/vat-fuel-and-power/vfup3100

In the majority of cases, no.

VAT can usually be recovered as input tax through standard VAT returns, provided the business makes taxable supplies.

Some organisations may not fully recover VAT, including:

  • Financial institutions

  • Landlords who have not opted to tax their properties

Unlike VAT, CCL is generally not recoverable, so any additional CCL will remain a cost to the business. 

The supplementary invoices form part of a one-off correction exercise covering historic VAT and CCL treatment.

For August 2026 consumption onwards, the correct VAT and CCL treatment will be applied as part of affected customers’ regular billing.