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Save on your energy costs! A guide to Tax Relief and the Climate Change Levy for Charities

02 April 2026

Is your charity or non-profit overpaying on energy? You could be eligible for discounts on your gas and electricity bills through VAT reductions and Climate Change Levy (CCL) exemptions.

1. Lower Your VAT on energy: From 20% down to 5%

Registered charities and non-profits can often access a reduced VAT rate of 5% for energy used in “Non-Business” activities.

  • What is “Non-Business”? These are core charitable activities like community services, places of worship, staff offices, and free education or care.
  • What counts as “Business use”? This covers things like running a café, shop, ticketed events, paid training courses, or renting out space commercially. Even if the profit from these activities is donated to the charity, they are considered business use as they involve economic activity that is not in itself the core mission of the organisation. See more here.

Conditions

  • The 60% Rule: If 60% or more of your total energy is used for non-business purposes, you can apply the 5% rate to your entire bill.
  • The Split Rate: If your non-business use is less than 60%, you still save! The qualifying portion is charged at 5%, while the rest stays at 20%.

How to Claim: Send a VAT declaration to your supplier confirming your charitable status and your estimated energy split (calculated by floor space or hours of use).

2. Climate Change Levy (CCL) Exemptions

The CCL is a tax on non-domestic energy, but charities can claim a 100% exemption for the energy used in non-business activities.

How to Claim: Submit a completed PP11 Form to your supplier to stop these charges.

3. Automatic Savings: Low Usage Thresholds

If your usage is very low, HMRC treats it as “domestic use”. This means you automatically get the 5% VAT rate and 100% CCL exemption, even if you’re a business. If you have multiple meters at a single set of premises, the usage from all meters is combined to determine if you meet the limit.

  • Electricity: Average of 33 kWh or less per day (approx. 1,000 kWh/month)
  • Piped Gas: Average of 145 kWh or less per day (approx. 4,397 kWh/month).

Real-World Savings Examples

 

 

Remember:

Even if your charity doesn’t meet the 60% threshold for “whole-bill” relief, you should still submit a declaration. As shown above, claiming relief on even 40% of your usage can save hundreds of pounds a year in VAT and CCL charges.

Action Checklist:

  • Review your bills: Are you being charged 20% VAT? Do you see a “CCL” charge? 
  • Calculate your split: Estimate your “non-business” vs “business” use (e.g., free services vs a paid cafe). You can use floor space or hours of use as a guide.
  • The 60% Test: If your non-business use is 60% or more, mark your declaration for 100% relief. If it is less, calculate the exact percentage to claim a pro-rata discount.
  • Submit your declaration: Contact your supplier for their VAT form and confirm your qualifying percentage.
  • Send Form PP11: Download and send this to your supplier to halt CCL charges.
  • Claim backdated credits: Ask your supplier if they can refund overpayments from previous years.
  • If You Are A Low Energy User: Check the ‘de minimus’ rules have been applied.

Need more details? Check out the official government guides on VAT relief and CCL exemptions.