Are Charities paying to much in energy taxes?
A startling figure has come to light from a survey by Make It Cheaper, it has estimated that: Charities will have paid about £78m of unnecessary tax on their energy bills in 2011.
Make It Cheaper says that of the 472 charities it surveyed, 46% did not realise they were exempt from the levy, a charge on businesses to pay for services to reduce carbon emissions, and only have to pay 5 per cent VAT on much of their energy costs.
Based on the research, the company estimates that charities could reclaim up to £145m in overpaid tax over the past three years. However, the survey says that more than two-thirds of charities do not know they can get a rebate.
Charities have to pay only 5 per cent VAT on energy used for "non-business activities" for which the charity’s only income is donations or grants, according to the HM Revenue & Customs website. They can get the VAT discount on all their energy supplies if these non-business activities account for at least 60 per cent of their energy.
Business activities include fundraising events, such as jumble sales, where payment is received for goods or services. They can also claim tax discounts on energy used in services for poor, disabled, ill or elderly people provided significantly below cost.
Charities have to send a certificate, including their charity number, to their energy supplier to claim the discount.
Date: 20th December, 2011
Articles from this Author
24th July, 2018
Academies Accounts Direction 2017/2018 (AAD)
9th February, 2018
Guidance for charities regarding the changes to the automatic disqualification of trustees rules
30th November, 2017
Legislative changes affecting the Charitable Incorporated Organisation (CIO)
14th November, 2017
Updated guidance for independent examiners (CC32)
For the latest Mercer & Hole news, visit our LinkedIn page mercer-&-hole