Club Management

Energy Guide

VAT on energy supplies for clubs as non-profit organisations

Members social and sports clubs are non-profit organisations and a number have successfully applied for a 5% VAT rate on energy supplies saving on the Climate Change Levy (CCL) at the same time.  Energy suppliers often categorise clubs as small businesses but unlike most small businesses, there are certain discounts available for clubs that quality.

VAT exemption for clubs and non-profits

Clubs and non-profit organisations may be entitled to the 5% VAT rate on energy used for non-business purposes, as well as exemption from the Climate Change Levy (CCL), which also reduces bills by 5%.   Suppliers don’t automatically apply these discounts, they usually have to be applied for.

N.B. – remember if the club is VAT registered the saving is on CCL only as any VAT paid will be refunded by HMRC.

Does the Club qualify for the discounts?

The following organisations may be eligible for reduced rate of VAT on business electricity and gas, as well as CCL exemption:

  • Charities (registered or unregistered)
  • Non-profit organisations
  • Village halls, sports clubs, community centres, etc.
  • Businesses using less than 4,397 kWh/month of gas or 1,000 kWh/month of electricity.

If non-business use is at least 60% of total use then the whole supply is excluded from the levy, this would unlikely to be the case for most clubs.  The club can still benefit if the non-business or domestic use is less than 60% of total usage, then the levy must be applied to that portion that does not qualify for relief.   For example, if 35% of energy use is non-business, 35% can be taxed at 5% and 65% at the standard VAT rate.

 Domestic use – Steward’s accommodation

Supplies of fuel and power for genuine domestic use are eligible for the reduced rate. Where the steward’s accommodation is used for domestic purposes and on a separate meter it should be eligible for the reduced 5% rate.

 Can the club VAT claims be backdated?

Yes, you can claim up to four years of back payment. You should expect a rebate from your supplier for the difference between 5% and the standard rate of VAT charged at the time of the bills. Remember the VAT reduction is only a benefit to the clubs who are not VAT registered.

 How to apply for VAT exemption?

Those clubs eligible for exemptions or rebates will need to fill out a VAT Declaration form, which can be obtained from suppliers, or downloaded online – you can find out more at GOV.UK. website.  Upon receiving a VAT Declaration form, suppliers usually take around 14 days to review the application and return with a decision.