Reduced VAT rate ― supplies of fuel and power

Produced by Tolley

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Reduced VAT rate ― supplies of fuel and power
  • Qualifying customers
  • Domestic use
  • Charity non-business use
  • Mixed use ― 60% rule
  • What can the reduced rate be applied to?
  • Supplies outside the scope of VAT
  • Supplies where the VAT needs to be apportioned
  • Supplies of gas
  • Refillable cylinders
  • More...

The supply of fuel and power is treated as a supply of goods for VAT purposes. Supplies are fuel and power are normally liable to VAT at the standard rate. However, providing certain conditions are satisfied, it is possible for suppliers to charge the reduced rate of VAT on certain supplies of fuel and power.

This guidance note provides a comprehensive overview of the conditions that need to be satisfied in order for a business to supply fuel and power at the reduced VAT rate. It should be read in conjunction with the List of types of fuel and power liable to VAT at the reduced and standard rate guidance note, which provides a list of the actual products that are liable to VAT at either the reduced or standard rate.

Qualifying customers

The following customers are eligible to receive supplies of fuel and power at the reduced VAT rate:

  1. domestic customers who use the fuel and power for domestic purposes

  2. charities using the fuel and power for non-business purposes

  3. relevant residential purpose properties, providing the de minimis limit is not exceeded (see below)

  4. customers using the fuel and power for part qualifying use, where at least 60% of the fuel and power is used for qualifying purposes

Domestic use

Supplies of fuel and power made to private households for domestic use are liable to VAT at the reduced rate. Supplies to the following properties are also deemed to be for domestic use and therefore liable to VAT at the reduced rate:

  1. armed forces residential accommodation

  2. caravans

  3. children's homes

  4. homes providing care for the elderly, disabled or people suffering from alcohol or drug dependency or mental disorders

  5. houseboats

  6. flats, houses and other dwellings

  7. hospices

  8. institutions where it is the main or sole residence of at least 90% of the residents

  9. monasteries, nunneries and other similar religious communities

  10. school and university accommodation for students / pupils

  11. self catering accommodation


VATA 1994, Sch 7A Group 1 Note 3

Please note that the reduced

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