This week we’ve heard that at least one energy company will be reducing its prices, and so, like all good households, it makes sense to review your church or charity bills and switch supplier if savings can be made. However, there may be another big way you can make energy savings.
Charities and non-profit organisations are entitled to a VAT reduction, from 20% down to 5%, on energy used for ‘non-business’ purposes as well as exemption from the Climate Change Levy. Shockingly many charities and churches have been unaware of overpayments and energy companies won’t automatically put you on the correct rate.
In a recent piece of research for ITV News * many good causes are paying too much VAT on the power they use. They found that in a sample of more than 100 that around a third may be overpaying. Some of these overpayments go back many years and amount to many thousands of pounds.
Energy companies sometimes treat charities and churches like small businesses and won’t automatically set the correct level of VAT. According to the ITV research the energy industry says they want to be as helpful as possible but can’t act if they don’t have all the information.
So, the call to churches and charities is to take a look at your energy bills and see how much VAT you are paying. You may be due for a big refund!