Business and personal use shared bill can I switch it of business tariff?

Leonhill

Hi there,

I have tried searching the forums but can't find any other posts about this.

I run my business from the same address as where I live and the energy usage is about 60% business and %40 personal for both gas and electric. At the moment I pay for it as a business expense on a business tarrif and then have to deduct what I owe the company for my personal usage, however business tariffs are really expensive compared to personal ones. So my questions are:

Can I switch to a personal or residential tariff and pay it myself then claim back some of the cost from the business? Or do I have to remain on a business tarrif?
Also does anyone know how I can get the cheapest business tarrif if I can't switch it to personal or residential tarrif?

Many thanks

Bluebirdman_of_Alcathays

I'm going back 4 years from when I was involved in this sort of thing, but the legalese then (British Gas) was that if you were on a residential tariff, the usage must be wholly and exclusively residential. Ergo, if there was any business usage, it had to be on a business tariff.


However, the reality is, unless your usage is clearly above and beyond what a household would use, nobody will find out that you're on a residential tariff when you shouldn't be. For low users, it's almost certainly cheaper to be on a residential tariff.


In your shoes (assuming your consumption is fairly normal) I would just switch. The only thing to note is business tariffs have some quite onerous exit conditions - many lock you in for a fixed period, then roll you onto another fixed contract unless you opt out. Check first.

modsandmockers

It is only the supplier who will have a problem with supplying you with energy on a residential tariff if it has reason to believe that your energy consumption is primarily for business purposes. HMRC will have no interest at all in the name or type of your tariff - they only want to know how much of your total energy costs you are claiming as a business expense.

If you can persuade your supplier that all, or nearly all, of your energy consumption is for domestic use then hopefully they would consider switching you to a residential tariff. There will be no discussion between the supplier and HMRC about the split between domestic and business use - neither has any reason to be interested in the other’s calculations.

System

Personally, I would talk to my accountant rather than take action on advice from a forum (however good that advice might be). A quick search revealed this:

How much VAT do I have to pay?

Your bill will state the amount of VAT that you’re paying. It is usually charged at the prevailing rate of 20%. However, if your business meets the ‘De minimis’ requirements, you ‘ll then be billed at 5%. This means that if you use an average of no more than 33 kWh per day (1000 kWh per month) for business electricity and/or less than an average of 5 therms or 145 kWh per day (150 therms/4397 kWh per month) for business gas, you’ll be billed at 5% VAT on your gas and electricity bills.

Where an electricity or gas supply is used wholly or partly for domestic or charitable non business use, that part of the supply qualifies for the reduced rate of VAT. This is known as qualifying use. Customers with qualifying use are requested to submit a separate customer declaration form for each supply to advise us what percentage is used for domestic or charitable non business purposes.

Further information regarding VAT is available from HMRC: http://www.hmrc.gov.uk/or HMRC National Advice Centre 0845 010 9000

modsandmockers

Hengus wrote: »

Personally, I would talk to my accountant rather than take action on advice from a forum (however good that advice might be). A quick search revealed this:

How much VAT do I have to pay?

Your bill will state the amount of VAT that you’re paying. It is usually charged at the prevailing rate of 20%. However, if your business meets the ‘De minimis’ requirements, you ‘ll then be billed at 5%. This means that if you use an average of no more than 33 kWh per day (1000 kWh per month) for business electricity and/or less than an average of 5 therms or 145 kWh per day (150 therms/4397 kWh per month) for business gas, you’ll be billed at 5% VAT on your gas and electricity bills.

Where an electricity or gas supply is used wholly or partly for domestic or charitable non business use, that part of the supply qualifies for the reduced rate of VAT. This is known as qualifying use. Customers with qualifying use are requested to submit a separate customer declaration form for each supply to advise us what percentage is used for domestic or charitable non business purposes.

Further information regarding VAT is available from HMRC: http://www.hmrc.gov.uk/or HMRC National Advice Centre 0845 010 9000

If the OP's business is registered for VAT and the energy account is in the name of the VAT-registered business, then it will be difficult to satisfy the energy supplier that the supply is primarily for domestic use!

footyguy

Leonhill wrote: »

Hi there,

I have tried searching the forums but can't find any other posts about this.

I run my business from the same address as where I live and the energy usage is about 60% business and %40 personal for both gas and electric. At the moment I pay for it as a business expense on a business tarrif and then have to deduct what I owe the company for my personal usage, however business tariffs are really expensive compared to personal ones. So my questions are:

Can I switch to a personal or residential tariff and pay it myself then claim back some of the cost from the business? Or do I have to remain on a business tarrif?
Also does anyone know how I can get the cheapest business tarrif if I can't switch it to personal or residential tarrif?

Many thanks

Is this a business address or a residential address? i.e. what is the address currently disclosed as to the council?

Maybe it's both (e.g. a farm) but then usually there are two separate supplies and 2 separate addresses (e.g. "the farmhouse" and "the cowshed")

If it's just a residential property, how did the supplier ever get wind of the fact you are also running a business there?
Was it because, perhaps, you are now using so much electricity that the usually residential supply was not sufficient to cope with your consumption/peak demand?

Anyway, if you've now agreed a business tariff, you are probably stuck by the terms of that contract you entered into. It should state on what terms you may terminate it.

Edit: Come back when you've got more time if you need to discuss this further...

Ian011

Hengus wrote: »

Further information regarding VAT is available from HMRC: http://www.hmrc.gov.uk/or HMRC National Advice Centre 0845 010 9000

HMRC switched on replacment 0345 and 0300 numbers in several batches between April and October 2013.

In December 2014, all HMRC 0845 and 0870 lines were switched to play a "you must hang up and redial the new number" message.

In June 2015, all HMRC 0845 and 0870 numbers were switched off and return "number unavailable" tone.