Is Business Energy Cheaper Than Residential?

If you are one of the estimated 3,403,000 people in the UK who are lucky enough to work from the comfort of your own home, then it has probably crossed your mind that a portion of your gas and electricity use can be put down to work purposes.

Domestic energy and business energy are different. When you compare the average unit rates between the two, businesses come out on top as they pay a far lower price. So, should you switch to a business tariff to help save you money on your energy bills at home?

Whilst it may seem the cheaper option after looking at the difference in unit rates, there are other things you need to take into consideration.

For instance, with domestic energy, you will pay just 5% VAT on your tariff. Businesses, on the other hand, have to pay 20% VAT. Business are also required to pay the Climate Change Levy (CCL). The CCL is charged at a rate of 0.541p per kWh for your electricity usage and 0.188p per kWh for gas.

These types of charges can drive up the cost of energy bills for businesses, but there are a few exceptions that are made for certain types of businesses:

  1. If you use renewable energy, then you won’t have to pay any CCL.
  2. If you use less than the average of 33 kWh of electricity and 145 kWh of gas a day then you don’t have to pay CCL and pay just 5% VAT.
  3. If your business has a residential element, for example you run a B&B, a campsite or a guest house, you don’t pay CCL and pay just 5% VAT.

Should You Choose Business Or Domestic Energy Tariffs If You Work At Home?

With cheaper unit prices it may seem as though business energy tariffs are the way to go but there are still a few things you need to consider before making the switch:

Usage

Suppliers have their own rules on the amount of energy you need to use for business purposes before you can switch to a business tariff. You need to check how much energy you use on a typical day during working hours, by calculating the split energy usage between when you are working and when you are not.

If your business usage is above 50% then chances are you qualify but always check with each supplier first to ascertain how much business energy usage they require before they can put you on their tariff.

Business Status

You need to be able to prove that your business actually exists with a business rates document or other proof that you own a registered company. Energy suppliers need to see something tangible in order to confirm you are running a business from your home.

Price Comparison

Compare business energy through us to determine whether it will actually be a cheaper option for you. Once you know your usage amounts and have quotes from both domestic and business energy suppliers you can fully compare which option is the most ideal and make the most informative decision going forward.

Is Business Energy Cheaper Than Residential?