HMRC have issued their Revenue and Customs Brief 10 (2026) confirming that zero rating will apply to electricity used for domestic purposes or by charities for non-business purposes from 1 October 2026 until 31 March 2027.
The temporary measure is intended to help reduce energy costs over the winter period and could result in meaningful savings for eligible charities, particularly those with significant premises costs. Suppliers should apply the relief automatically if you currently benefit from the reduced 5% VAT rate on your electricity.
If you are not currently benefitting from the reduced 5% rate this may be a good time to explore whether you could. However, the rules in this area can be complex, particularly where premises are used for a mixture of charitable, business and non-business activities. If you are unsure whether your charity qualifies, or you believe the correct VAT treatment is not being applied, please contact CTG’s technical helpline at [email protected].
Energy-saving materials
The temporary zero rate of VAT for the installation of qualifying energy-saving materials is due to end on 31 March 2027, unless the Government decides to extend it.
For charities considering projects such as solar panels, heat pumps, insulation or other energy-efficiency improvements, it may be worth reviewing plans now to determine whether installation can take place before the relief expires. More details on the qualifying materials and conditions for relief can be found here.