VAT on Energy!!

SuperRoj

Can anyone help me out as to why we are continuing to pay VAT on our Energy bills?? After just getting over the last lot of price rises from last winter, we now look like being hit by another wave of rising before this winter!! What surprises me most is the 5% VAT we pay on top of our Electric and Gas bills, HMRC normally only taxes "luxuries" so should we be led to believe that although at 5% it is cheaper than the normal 20% VAT rate, the Government believes that Electric and Gas are luxuries we could do without??

agrinnall

SuperRoj wrote: »

Can anyone help me out as to why we are continuing to pay VAT on our Energy bills?? After just getting over the last lot of price rises from last winter, we now look like being hit by another wave of rising before this winter!! What surprises me most is the 5% VAT we pay on top of our Electric and Gas bills, HMRC normally only taxes "luxuries" so should we be led to believe that although at 5% it is cheaper than the normal 20% VAT rate, the Government believes that Electric and Gas are luxuries we could do without??

i don't know in what fantasy world you're living if you think HMRC only tax luxuries. All goods and services, with a very few exceptions, are liable for VAT at 20%, so only paying 5% on energy is a pretty major discount. If you have a real objection to paying VAT on energy you need to take it up with your MP, it's the goverment that decides what items are taxed and at what rate, don't blame HMRC, they simply apply the rules that our elected representatives make up.

AirlieBird

I sure can help you out as to why you are paying VAT on Energy and you have the last Conservative Government to blame. You see under EU rules each country can have up to two reduced rates of VAT. Ours are 0% and 5%. The 0% rate is a special concession for the UK as strictly speaking it is not allowed - the minimum rate for a reduced rate under EU law is 5%. As it is technically against EU rules once something that was zero-rated is charged at a higher rate of VAT the minimum that must be charged is 5% - it cannot go back to being zero rated. As the last Conservative Government introduced VAT on energy at the full standard rate it meant that the concession to charge VAT at 0% on it ended so when the last Labour Government was elected they could only reduce it to the minimum allowed, i.e. 5%.

John_Pierpoint

The first few percentage points of VAT are used to finance the administration of and grants from "Brussels".
One good reason for insisting that VAT is charged on everything if possible (even when the accountants find it impossible to sign off on the annual accounts).

The majority of your money goes to land owners, who are able to call themselves "farmers" (or who rent out farm land to farmers and are thus able to increase the rents). Basically the money is paid on every acre that is kept in a condition suitable for agricultural use. In England there is a satellite system that in theory can recognise agricultural land as small as a sheet of A4 paper. (In the Celtic fringes they are still working on a system that pays out the subsidy based on what the farm produced 10 years ago). As farm produced food is "zero rated", farmers are already reclaiming all the VAT on everything bought for "the farm" and able to keep it as there is no VAT, collected on the invoices for the farm's output.

http://farmsubsidy.org/

These are thought to be the UK's top five in the list of deserving charity cases:

TATE & LYLE EUROPE (031583) €827,979,239
NESTLE UK LTD 804817 €196,777,997
MEADOW FOODS LTD €129,279,959
Czarnikow Group Limited €129,104,665 <<<<<<<<<<< If you shop a "Primark" then perhaps you are benefiting.
PHILPOT DAIRY PRODUCTS LTD €88,307,975

BTW you can buy insulation subsidised by "compulsory unmitigated charges" (tax) that is also being charged on your energy bills [nudge nudge] if that helps.

tamiami

My landlord bills me for my electricity, we live on a farm that has a few properties he rents, he is the farmer. He charges 20% VAT on my invoice - is this correct? Thanks.

molerat

If he is buying a commercial supply, which is more than likely on a farm, and not domestic then yes. Do you have your own meter that is read by the energy company or just a sub-meter ?

tamiami

Each rented property has it's own meter and are read by the landlord. It is farm electric I believe.