Water and sewage

Produced by Tolley

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

  • Water and sewage
  • Water
  • VAT treatment of non-industrial activities
  • Mixed use
  • Sewage
  • Supplies of steam and hot water
  • Supplies connected with water and sewage services
  • Civil engineering works
  • Water meters

Water and sewage

This guidance note provides an overview of the VAT treatment of water and sewage services.


The supply of water that will be used in connection with industrial activities will be liable to VAT at the standard-rate. The supplier is responsible for determining who is using the water and the correct VAT treatment of the supply made.

An industrial activity is one of the activities described in Divisions 1 – 5 of the 1980 edition of the Standard Industrial Classification and the five divisions are:

  1. energy and water supply industries

  2. extraction of minerals and ores other than fuels; manufacture of metal mineral products and chemicals

  3. metal goods, engineering and vehicle industries

  4. other manufacturing industries

  5. construction

VAT treatment of non-industrial activities

The following table provides an overview of the VAT treatment of water that has been supplied for non-industrial activities:

ActivityVAT treatment
Supplies of water and ice excluding heated water, distilled water, or mineral waters, etczero-rated
Supplies of hot water or steamreduced-rated or standard-rated (see below)
Provision of water against payment of an unmeasured charge, standing charge or other availability charge for those supplieszero-rated
Charges levied for the abstraction of water by licence made by the Environment Agencyoutside the scope of VAT
Charges levied specifically for the supply of water for hose pipes, swimming pools and garden ponds, sprinklers and sprinkler licence feeszero-rated
Disconnection / reconnection charges that have arisen because customer has not paid their billzero-rated
Opening / closing stopcocks upon request of the water supplierzero-rated
Distilled / deionised water and water of similar puritystandard-rated
Sterile water excluding supplies where additives have altered the nature of the productzero-rated
Mineral, table and

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