Energy bill help for businesses

The Government has subsidised energy bills for businesses as well as consumers to help them through the cost of living crisis. The package of help was applied from October 2022 with the first phase of support ending on March 31 2023.

A second round of help, which is less generous, is in force from April 1 2023 to March 31 2024.

Energy bill help for businesses until end of March 2023

The Energy Bill Relief Scheme helps businesses and public sector organisations from October 2022 to the end of March 2023 by providing a discount on wholesale gas and electricity prices.

Covering charities, businesses and public organisations such as schools and GP surgeries, the scheme reduces prices by more than half.

The price was set to:

  • Electricity: £211 per megawatt hour (MWh) / 21.1p per kilowatt hour (KWh)
  • Gas: £75 per MWh / 7.5p per KWh

When the scheme was set, wholesale prices were estimated to be:

  • Electricity: £600 per MWh / 60p per KWh
  • Gas: £180 per MWh / 18p per KWh

The discount was automatically applied to bills but eligibility is for those who are:

  • On fixed rate contracts agreed after December 1 2021
  • On standard variable tariffs, flexible purchase contracts or variable 'Day Ahead Index' tariffs.

Variable discounts were capped to a maximum reduction of £345 per MWh for electricity and £91 per MWh for gas.

However the capped tariffs end on April 1 2023 and a new, less generous rate will be offered.

Explaining the reason for ending the EBRS, the Government said: "The Government has been clear that current levels of support were time-limited and intended as a bridge to allow businesses to adapt.

"Wholesale gas prices have now fallen to levels just before Putin’s invasion of Ukraine and have almost halved since the current scheme was announced. The EBDS therefore strikes a balance between supporting businesses over the next 12 months and limiting taxpayer’s exposure to volatile energy markets, with a cap set at £5.5 billion based on estimated volumes."

Energy bill help for businesses from April 1 2023

From April 1 2023, businesses, charities and public sector organisations will receive a discount on their energy bills but at a lower rate than before. This will last until March 31 2024.

The discount will be:

  • Electricity: £19.61 per MWh
  • Gas: £6.97 per MWh

However, the Government will only apply this discount if wholesale energy prices are above a set threshold. Once wholesale prices drop below a certain point, the organisation must fund the entire bill itself.

The thresholds are:

  • Electricity: £302 per MWh
  • Gas: £107 per MWh

Higher-intensity industries that use a lot of energy are able to access higher discounts. These industries include steelmakers, coal mining and a number of manufacturers. The full list is here.

The threshold for these so-called Energy and Trade Intensive Industries are:

  • Electricity: £185 per MWh
  • Gas: £99 per MWh

Energy bill help for self employed

If you’re self-employed and have a non-domestic bill, ie because you have a business premises, you follow the same eligibility as other businesses.

If you're self-employed and don’t use a business premises (ie you work from home) you may be able to offset some of your energy costs against the amount of tax you pay.

Heating and lighting fall under an allowable expense meaning it is tax deductible.

You cannot claim the entire bill against your tax, because you don't solely work from the property - you use it as a place to live too. So you will need to divide your costs in a reasonable way. The simplest way to do this is probably to divide the number of rooms you have and use for work.

For example you have four bedrooms, a living room, kitchen, dining room and conservatory, you have eight rooms in your house. You use one of them for half the week for work. So assuming each room uses roughly the same amount of energy, you would divide your bill by eight to account for the percentage of rooms you use, and then by half because you only use that room half of the time for work. That amount is then tax deductible.

For those who work from home, rather than a business premises, you can also claim tax relief on a percentage of your council tax bill, using a similar equation to your gas and electricity.

Click here for a list of expenses you can claim when self employed

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