Is there VAT on business water?
Castle Water
The UK's largest independent business water supplier & the only water retailer that will give you an instant online.
Whether or not your business is charged VAT on water usage depends on your Standard Industrial Classification (SIC) code. SIC codes are used by government bodies such as Companies House and the Office for National Statistics to systematically identify and categorise the principal business activities of limited companies.
The codes reflect the activities of each company, and businesses are grouped into trades or sections with similar classifications. Most companies only need one SIC code, but some may need many, depending on the complexity of their business. In these cases, the main SIC code will be used to assess if VAT is charged.
In essence, if you run a non-industrial business, you could be exempt from paying VAT on your water supply. If you run an industrial company, whether you will pay VAT on your commercial water bill depends on your main business activities as determined by your SIC code. VAT is charged at the standard rate of 20%.
To ensure you’re paying the correct VAT charges on your business water bills, let your business water retailer know your SIC code. If you do not inform your retailer of your SIC code, whatever your business, they will be required by law to charge VAT on your commercial water services by default.