Are You Paying the Right VAT on Your Water Bills?

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The question seems simple doesn’t it? Yet, we often see organisations that are not paying the right amount of Value Added Tax (VAT). So, to help you understand the key factors to answer this question, let’s take a look at the detail about your water bills.

VAT is a levy on the sale of certain goods or services by UK businesses and is currently set at 20%.  Businesses that undertake industrial activities that fall under division 1-5 under the 1980 Standard Industrial Classification (SIC) are liable to pay VAT on their water supply. In brief, those Divisions are:

Division Title
1 Energy and water supply industries
2 Extraction of minerals and ores other than fuels; manufacture of metal, mineral products and chemicals
3 Metal good, engineering, and vehicle industries
4 Construction
5 Other

All other non-industrial businesses are exempt from paying VAT on their water supply. It is important that you inform your water retailer of your correct business classification (SIC code) so they can ensure you pay the correct VAT on your water supply.

Many businesses such as care homes and charitable organisations are not VAT registered. Therefore, the effects of overpaying VAT on their water supply is an added cost burden. So please check your bills and ensure that you are paying the right VAT!

If you have any further questions or would like any further impartial advice regarding your water and wastewater supplier, feel free to contact us or click here to learn more.

Phone: 0800 849 1342