Businesses must pay VAT on the energy they use. The standard rate is 20% and although this is a business-to-business purchase, you cannot claim the tax back. Most businesses will pay the 20% rate, but some may qualify for a discounted 5% rate if: The business is a charitable or non-profit organisation. The business uses at least 60% of its energy for ‘domestic purposes’. This would apply to businesses with residential services, such as care homes or self-catering holiday accommodation. The 5% rate applies to the whole bill if you the business uses 60% or more of its energy for domestic reasons, however if it’s less than 60%, only the proportion of energy used for domestic reasons is eligible. The business has ‘low’ energy usage, which is usually defined as using less than 1,000kWh of electricity every month (33kWh a day), or 4,397kWh of gas (145kWh a day).   Read more: our in-depth guide to business energy VAT