Small charities are paying millions of pounds – unnecessarily – in extra VAT charges and environmental tax on their energy bills, according to price comparison service Make It Cheaper.

Like households, charities qualify for a reduction in VAT from 20% to 5% on energy used for 'non-business' purposes and exemption from Climate Change Levy (CCL)*, which cuts a further 5% off bills. This include the UK's 200,000 registered charities** plus an unknown number of smaller ones that that are not required to register because they fall below the £5,000 per year income threshold, typically: village halls, sports clubs, community centres, Guide/Scout groups and Women's Institutes.

However research conducted by Make It Cheaper among 656 small charity treasurers has revealed that over a third (37%) did not know about the discounts available. Significantly more (58%) were unaware that in order to qualify they are, unlike households, required to sign a declaration form and send it to their supplier. Its findings were as follows:

Electricity Pylon (PD)• 37% of treasurers didn't know a reduced rate of VAT and exemption from CCL applies to charity energy bills.

• 58% didn't know the onus is on the charity to apply for the discounts by signing a declaration form and sending it to their energy supplier.

• 71% didn't know that only 60% of the energy used needs to be on 'non-business activities' to qualify for the reduced rates on the whole supply.

• 74% didn't know that rebates for overpayments can be claimed as far back as 2009.

The research uncovered cases where charities have successfully applied for rebates worth thousands of pounds and others where discounts were once applied but have subsequently been withdrawn by suppliers. This has happened as a result of the charity moving premises, changing supplier or its energy consumption rising.

Jonathan Elliott, founder & CEO of Make It Cheaper, commented:

“No charity should be overcharged and yet it appears to be a common problem when utility companies treat them blindly as businesses. Any treasurer in receipt of bill should always check their VAT rate and also look to see if their unit charges exceed 12 pence per for electricity or four pence for gas. If so, then it's time to take matters in hand.”

The first step for any organisation looking to claim exemptions or rebates is to complete a VAT Declaration form and submit it to its energy supplier for assessment, which normally takes around 14 days. For more information – including the necessary forms for each energy supplier – call Make It Cheaper on 0800 140 4692 or visit

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