With rising energy bills many companies are looking for ways to reduce costs and their eligibility for business energy grants.
Whilst business energy customers are not protected by the price cap, there's some help available. We've created this guide to help your business navigate rising energy bills.
Energy Bill Relief Scheme
The Energy Bill Relief Scheme addresses the 2022/2023 winter months as it runs from October 2022 through to March 2023. This scheme applies to all fixed-rate business energy contracts agreed on or after 1st December 2021. Variable and flexible tariffs are also eligible.
You do not need to apply for this as your business energy supplier will automatically apply this to your energy bills.
This scheme means you can still switch business energy suppliers to protect yourself against future price increases for peace of mind and still benefit from the energy bills grant.
Are You Paying The Right VAT On Your Business Energy?
Every business must pay VAT on its energy usage. However, some companies may be entitled to a discounted rate of 5%.
Energy companies will charge 20% VAT on business energy bills as standard. This discounted rate applies to businesses that fit into the following criteria:
- Energy usage is less than 4,397 kWh of gas per month (52,764 kWh annually) or less than 1,000 kWh of electricity each month.
- You're a charity or non-profit
- At least 60% of energy usage is for domestic purposes
If you think you have been paying more VAT on your energy bills than you should have, you can backdate your claim up to 4 years.
Reduce Your Climate Change Levy Charge
The Climate Change Levy (CCL) is an environmental tax on business energy used in the UK. This is an additional tax change alongside VAT, but this charge can be reduced with better energy efficiency.
The CCL was introduced to tackle rising greenhouse gas emissions and encourage companies in the UK to implement energy efficiency policies. Most companies are required to pay CCL but there are some exemptions:
- Charities & non-profits
- Small businesses with small energy usage under 1,000 kWh of electricity or 4,397 kWh of gas per month.
If you do not fit into the exemption requirements, you can reduce your CCL change by improving business energy efficiency. Actions to improve energy efficiency include:
- Carrying out a business energy audit
- Switching to energy-efficient equipment
- Improving the building’s insulation
You can check if your business is eligible for a reduced rate here.
Reducing Business Energy Usage
While securing business energy efficiency grants is crucial for many businesses managing their costs, a great way to save money if you’re not eligible is to become more energy efficient.
Switching commercial energy suppliers is a great way to secure peace of mind at a time when energy prices are rising. Many support schemes are not impacted when you switch suppliers and small businesses can benefit from this if prices continue to increase.
In addition to switching suppliers, it is a good idea to assess your energy efficiency. Many small business owners choose to conduct their own business energy audits.
This process simply looks are your energy prices against your usage and asses:
- The equipment you use
- Employee habits
- Lighting in your business premises
- When and how you use energy
A business energy audit will go much deeper and be carried out properly it can save small businesses a lot of money on their energy bills through simple energy efficiency measures. This is a great way to manage costs when you're not eligible for any business energy efficiency grants.