Guide · Energy bills
VAT and the Climate Change Levy on care home energy bills
The short answer
- Energy used by a care home for the elderly or disabled usually counts as "qualifying use". That usually means a lower rate of VAT and no Climate Change Levy.
- From 1 October 2026 until 31 March 2027, VAT on qualifying electricity in Great Britain is 0%. Gas stays at 5%.
- If a care home's bill shows 20% VAT or a Climate Change Levy line, it may be wrong. Suppliers can correct past bills, up to four years back, where they agree.
Which care homes qualify?
HMRC's guidance on fuel and power (VAT Notice 701/19, section 3.2.1) lists the residential accommodation whose energy counts as qualifying use. It includes homes providing care for the elderly or disabled, for people with a past or present dependence on alcohol or drugs, or for people with a past or present mental disorder. Children's homes and hospices are on the list too. Hospitals, prisons and hotels are not.
The Climate Change Levy follows the same qualifying-use rules. HMRC's levy guidance (Excise Notice CCL1/3) counts homes for the elderly and disabled as domestic use, and energy for domestic use is excluded from the levy.
Mixed use and separate buildings
If at least 60% of a supply is for qualifying use, the whole supply can be treated as qualifying. Below that, the bill is split between the lower and standard rates. A separately metered head office, training centre or day centre without residents can correctly be charged the standard rate and the levy.
What the VAT rate should be
| Supply to a qualifying care home (Great Britain) | VAT rate |
|---|---|
| Electricity, from 1 October 2026 to 31 March 2027 | 0% (temporary zero rate) |
| Electricity, up to 30 September 2026 | 5% |
| Gas | 5% |
| Supplies that don't qualify, such as a separate office | Usually 20%, plus the levy |
The temporary zero rate covers Great Britain (England, Scotland and Wales). Electricity in Northern Ireland stays at 5%.
Why care home energy bills go wrong
- The declaration doesn't follow the home. Suppliers apply the lower rate once the home gives them a signed VAT declaration, sometimes called a VAT certificate. It's given to one supplier, so after a switch, or when a home changes hands, a new account can start at the standard rate with the levy.
- New business accounts start at the standard rate. Until a declaration arrives, suppliers usually bill business customers 20% VAT and the levy.
- The wrong percentage. A declaration that understates qualifying use, for example 50% when the true figure is 60% or more, splits a bill that should be at the lower rate in full.
- The new zero rate. From 1 October 2026 until 31 March 2027, qualifying electricity in Great Britain should be billed at 0%, not 5%.
Can past bills be corrected?
It's possible, but not automatic. HMRC allows back-dated declarations, but whether past bills are adjusted is a commercial decision between the supplier and the customer. Where a supplier agrees, corrections can go back up to four years.
The declaration must be signed by a responsible person at the home's business, such as a director, and should state an honest percentage of qualifying use. Brookhold never signs a declaration for a home.
How Brookhold helps
We check the VAT rate and the Climate Change Levy on every meter's bills, free. If a bill looks wrong, we prepare the paperwork for you to sign and deal with your supplier, including asking for past bills to be corrected.
- Fee: for energy, our fee is 20% of the VAT and Climate Change Levy overcharges we recover, so you keep 80%. If nothing is recovered, you pay nothing.
- Correcting your future bills costs nothing.
- We don't sell energy and we don't switch your supplier. Suppliers don't pay us a penny.
The same free check covers your food and supplies invoices: see what we check.
Questions
Is VAT on electricity 0% for care homes?
For qualifying use in Great Britain, yes, for now. HMRC says qualifying supplies of electricity in Great Britain are liable to VAT at 0% from 1 October 2026 to 31 March 2027. Homes providing care for the elderly or disabled are on HMRC's list of qualifying residential accommodation. Gas stays at 5%.
Do care homes pay the Climate Change Levy?
Usually not. Energy for domestic use is excluded from the levy, and HMRC's levy guidance counts homes for the elderly and disabled as domestic use. A separately metered office, or another building without residents, can be different.
Does our VAT declaration carry over if we change supplier?
No. The declaration is given to one supplier, so a new supplier needs a new one. The same goes when a home changes hands.
Can we get money back for past bills?
Possibly. Suppliers can correct past bills, up to four years back, but it's their decision, so it's never guaranteed. If a supplier credits or refunds past overcharges, our fee is 20% of what comes back, so you keep 80%. If nothing comes back, you pay nothing.
How much can a wrong bill cost a care home?
Our estimate: where standard-rate VAT and the levy are charged on a care home's own energy, it overpays about a fifth of the bill.
Does Brookhold sell energy or switch our supplier?
No. We check your bills and deal with your current suppliers. We don't sell energy and we don't switch your supplier. Suppliers don't pay us a penny.
Sources
- HMRC, VAT Notice 701/19: fuel and power (updated 8 September 2026): the temporary zero rate for Great Britain, and section 3.2.1 on residential accommodation.
- HMRC, Excise Notice CCL1/3: Climate Change Levy reliefs and special treatments for taxable commodities (updated 24 March 2026).
This page explains the rules in general. It isn't tax advice for a particular home: whether a supply qualifies depends on how each building and meter is used.