Yes, if the electricity is for a "qualifying use". From 1 October 2026 to 31 March 2027, electricity in Great Britain that used to get the 5% reduced VAT rate is charged at 0%. That covers a charity's non-business use, care homes and other residential accommodation, and very small supplies to any business.
The catch is that nothing about who qualifies has changed. If your organisation was paying 20% VAT on electricity before October, the temporary zero rate doesn't help you. If you were paying 5%, you should now be paying 0%, and it's worth checking your bills say so.
What exactly changed on 1 October 2026?
HMRC's Revenue and Customs Brief 10 (2026) says: "During this period, qualifying supplies of electricity in Great Britain are liable to VAT at 0%." The relief runs from 1 October 2026 to 31 March 2027 (as of 21 October 2026; the government could extend or end it).
Three limits are worth knowing:
- Great Britain only. In Northern Ireland, qualifying electricity stays at 5%.
- Electricity only. "Other fuel types are not affected by this change." Gas for a qualifying use is still at the 5% reduced rate.
- No new categories. HMRC says there are "no changes" to which supplies qualify. The rules are still the ones in VAT Notice 701/19, section 3.
Which organisations can get 0% VAT on electricity?
Under VAT Notice 701/19, a supply qualifies if it's for domestic use or charity non-business use, or if it's small enough to fall under the de minimis limit.
Charity non-business use. HMRC's test is simple: "If a charity does not make a charge, its activities are generally non-business." Electricity used for those activities qualifies. Being a charity isn't enough on its own: electricity used for a charity's activities doesn't automatically qualify. A charity shop, a café, or a hall hired out for a fee is normally business use, because "supplies made for remuneration are normally business."
Residential accommodation, including care homes. Domestic use isn't just houses and flats. Notice 701/19 lists residential accommodation that also counts, including:
- children's homes
- homes providing care for the elderly or disabled, or for people with a past or present dependence on alcohol or drugs or a mental disorder
- hospices
- institutions that are the sole or main residence of at least 90% of their residents
- school and university residential accommodation for students or pupils
- armed forces residential accommodation
- monasteries, nunneries and similar religious communities
- self-catering holiday accommodation, caravans and houseboats
Hospitals, prisons and hotels, inns or similar establishments are specifically excluded.
Very small users (de minimis). Electricity supplied at "not more than an average rate of 33 kilowatt hours per day, 1,000 kilowatt hours per month" to one customer at one premises is treated as domestic use, "even when the supply is to a business customer." So a small charity office, a community hut or a tiny shop under that limit should get 0% on electricity whatever it's used for. For gas, the limit is 145 kWh a day or 4,397 kWh a month, but gas stays at 5%.
What if a site is used for both charitable and business activities?
This is the 60% rule. If 60% or more of the electricity at a site is for a qualifying use, HMRC says "you should treat the whole supply as for qualifying use", so the whole bill gets 0%. If it's less than 60%, only the qualifying share gets 0% and the rest is charged at the standard rate.
Here's an example with made-up figures. A charity runs a free drop-in centre and a paid-for café in the same building. If it reasonably works out that 70% of the electricity is used by the free service, the whole supply qualifies. If it's 40%, then 40% of the electricity is zero-rated and 60% is standard-rated.
To get this, the supplier needs a VAT certificate from you giving an exact percentage of qualifying use, signed by a responsible person. You need a separate certificate for each premises. Keep the calculations behind it, because HMRC warns that "anyone providing an incorrect certificate may be liable to a financial penalty." You don't need a certificate for supplies under the de minimis limit.
Does the same rule cut the Climate Change Levy?
It does, and that hasn't changed. Excise Notice CCL1/3 says the levy "does not apply to taxable commodities used by domestic consumers, or by charities for non-business use", and small (de minimis) supplies are excluded too. For mixed use the same 60% test applies, using the same VAT certificate. If a qualifying site has CCL on its bill, ask the supplier why. Our Climate Change Levy and VAT guide explains the levy in more detail.
How do you check your bill is right?
Look at the VAT line on an electricity bill covering October 2026 onwards. Our guide to reading a business energy bill shows where to find it.
- Shows 0% from 1 October: the supplier is treating you as qualifying. Nothing to do.
- Shows 5% after 1 October: you probably qualify but the change hasn't been applied. Ask the supplier to correct it.
- Shows 20%: the supplier treats the supply as business use. If you think some or all of it qualifies, check whether a VAT certificate is on file and whether the percentage is still right.
For a bill that covers days either side of 1 October, HMRC lets suppliers split the VAT by when the energy was used. It recommends using meter readings to do this, so a reading taken around 1 October helps.
What's still unclear?
The Charity Finance Group raised some open questions with HMRC, including how mixed business and non-business use is handled and how long the relief will last. As of 21 October 2026, HMRC's published guidance says the qualifying rules are unchanged, so the existing certificate and 60% approach still apply. The relief is due to end on 31 March 2027 unless it's extended. After that, qualifying electricity is due to go back to 5%.
This is general information, not tax, legal or financial advice. For a complex mixed-use site, a charity tax adviser or the Charity Tax Group can help.
What to do next
- Find an electricity bill covering October 2026 and check the VAT rate on it
- Work out whether each site is mainly free, non-business use, residential, or under 1,000 kWh a month
- For mixed-use sites, check your VAT certificate exists and the percentage is still accurate
- Ask your supplier to correct any 5% or 20% charge you think should now be 0%, in writing
- Check CCL isn't being charged on a qualifying supply
- Note 31 March 2027 as the date the 0% rate is due to end, and budget for 5% after that
- Use the free estimator to sense-check what your electricity should cost, and our jargon guide for any terms on the bill
- If the supplier won't fix a billing error, follow our bill dispute steps and see every business energy deadline on one page