VAT: 5% or 20%
123 Firewood Ltd has firewood for sale with 5% VAT and with 20% VAT. The firewood is exactly the same but HMRC applies different VAT rates depending on the purpose of the purchase.
It is the buyers responsibility to choose the product with the correct VAT rate that applies to them. As a guide, the reduced 5% VAT rate applies to firewood bought for domestic fuel use, else the standard 20% VAT rate applies.
All current pricing on this website is including 5% VAT; for wood purchases with 20% VAT, please call or email.
For your information, please click here for the link to HMRC's website and below the text that explains this VAT legislation.
The reduced rate of VAT applies to supplies of fuel and power for qualifying use (see Section 3).
The following supplies are charged at the reduced rate:
- fuel and power for domestic use (see paragraph 3.2)
- fuel and power for charity non-business use (see paragraph 3.3)
- fuel and power where the amount supplied does not exceed the small quantities de minimis limits (see paragraph 3.2), and
- fuel and power partly for qualifying use and partly for other purposes, where 60% or more of the supply is for qualifying use (see paragraph 3.4).
Any of the charges listed below are part of the payment for a supply of fuel and power, provided they are:
- made by a person who supplies the fuel and power to the consumer - up to and including the meter
- charged to that consumer, and
- inseparable from a supply of fuel or power to that consumer.
If the supply is for qualifying use (see Section 3) the reduced rate applies.
- Disconnection and re-connection of the supply and special meter readings at the instigation of the supplier.
- Installation by a supplier of liquefied petroleum gas of a bulk gas tank regarded as essential to the supply of liquefied petroleum gas.
- Installation of check meters.
- Installation or replacement of lines and switchgear belonging to the electricity supplier.
- Installation tests and re-tests where required by the supplier to protect their equipment.
- Maximum demand and minimum guarantee charges.
- Removal of damaged coins from meters.
- Rental charges for meters, including secondary meters used by landlords to apportion charges between their tenants.
- Rental of a bulk gas tank in conjunction with the supply of liquid petroleum gas to that tank.
- Repair, maintenance or replacement of equipment and gas pipes or electric cables - belonging to the supplier - up to and including the consumer’s meter. (Where the supplier’s conduits are within the fabric of a building, reduced rate supplies by the supplier are limited to work essential for getting at the conduits, and making good. All consequential work is standard-rated. Contractors’ supplies to the supplier are standard-rated.)
- Replacing a credit meter with a pre-payment meter under the supplier’s Code of Practice, or replacing or re-siting by a supplier of their meter at their instigation.
- Replacement of mains fuses and provisions of earthing terminals.
- Standing charges (see also paragraph 10.10).
Any of the above supplies are standard-rated when supplied by a contractor other than the supplier of fuel and power.
If a supplier instructs a contractor to send a bill direct to a consumer for work that would have been at the reduced rate if invoiced by the supplier, the contractor must charge the consumer VAT at the standard rate.
Supplies from sub-contractors to suppliers of fuel and power are not taxed at the reduced rate.
The following supplies are standard-rated:
- wholesale supplies of fuel and power
- any road fuel gas or hydrocarbon oil on which excise duty is chargeable (but see paragraph 6.1.5 for hydrocarbon oil exceptions)
- hire of mobile generators for operation by the customer
- repairs, maintenance and replacement of pipes not belonging to the fuel or power supplier - normally those on the consumer’s side of the meter
- servicing contracts other than supplies of insurance
- sale of meters to commercial, industrial and domestic consumers for their own use
- altering coin mechanisms of secondary meters
- services in connection with tests carried out, for example, at the request of estate agents or prospective purchasers of premises
- replacement of meters not under the supplier’s Code of Practice and re-siting meters at the request of the consumer
- diverting mains to meet local authority requirements (these supplies are zero-rated when work is carried out in the course of construction of new dwellings - see Notice 708 Buildings and construction)
- raising or lowering of overhead power lines in connection with the movement of abnormal loads, including escorting the loads (these supplies are zero-rated when work is carried out in the course of construction of new dwellings - see Notice 708 Buildings and construction)
- supply, repair and maintenance of public lighting circuits to local authorities
- temporary floodlighting, emergency or decorative lighting
- charges for playing games such as squash, tennis, billiards and snooker collected by means of a coin-operated lighting meter - that is, a time switch controlling the availability of light for a fixed period of time (may be exempt in certain circumstances - see Notice 701/45 Sport), and
- blast freezing.
The following charges are outside the scope of VAT:
- replacement by the gas or electricity supplier of dangerous, obsolete or inefficient appliances or parts, after the meter, under statutory contractual obligation (this covers only the limited circumstances of work undertaken by gas and electricity utilities to comply with their statutory contractual obligations to supply fuel and power. It does not cover modification works to gas water heater flues in caravans), and
- charges by a gas or electricity supplier for repairs to its own property following damage.
Where less than 60 % of the supply is qualifying use (see paragraph 3.4) and the rest is for other purposes. (The qualifying use element is reduced-rated the other use is standard-rated.)
The first time connection of a dwelling and certain other buildings to the gas or electricity mains supply may be treated as a zero-rated supply in certain circumstances. You can find out more about this in Notice 48 Extra-statutory concessions.
Supplies of civil engineering services that are supplied in the course of construction, alteration or conversion of a building may be zero-rated or reduced-rated in certain circumstances. You can find out more about this in Notice 708 Buildings and construction.
The value of a supply for VAT purposes will include CCL where appropriate.
The levy is chargeable on the industrial and commercial supply of taxable commodities for lighting, heating and power by consumers in the following sectors of business:
- public administration, and
- other services.
Taxable commodities are:
- coal and lignite
- petroleum and hydrocarbon gas in a liquid state
- coke, and semi-coke of coal or lignite
- natural gas as supplied by a gas utility, and
- petroleum coke.
The levy does not apply to taxable commodities used by domestic consumers, or by charities for non-business use. Supplies of small amounts of energy (de minimis) are also excluded.
For CCL purposes, 'domestic use' and 'charity non-business use' have the same meanings as in paragraphs 3.2 and 3.2.1 respectively.
You can find further information on the scope and application of Climate Change Levy in Notice CCL 1 A general guide to climate change levy.
Qualifying use means:
- 'domestic use' (see paragraph 3.2), or
- 'charity non-business use' (see paragraph 3.3).
3.2.1 Supplies deemed to be for domestic use
Supplies of certain small quantities of fuel and power - known as de minimis - are always treated as being made for domestic use, even when the supply is to a business customer. These limits are explained in Sections 4 (gases), 5 (electricity), 6 (oils), and 7 (solid fuels). Supplies within the limits should be taxed at the reduced rate. You do not need a certificate to apply the reduced rate to such supplies (see paragraph 3.5).
3.2.2 Other supplies that are for domestic use
Supplies of fuel and power that exceed the de minimis limits are for domestic use only if they are for use in a dwelling or certain types of residential accommodation (excluding hospitals, prisons or similar institutions, hotels or inns or similar establishments). Examples are:
- armed forces residential accommodation
- children’s homes
- homes providing care for –
- the elderly or disabled
- people with a past or present dependence on alcohol or drugs
- people with a past or present mental disorder
- houses, flats or other dwellings
- institutions that are the sole or main residence of at least 90% of their residents
- monasteries, nunneries and similar religious communities
- school and university residential accommodation for students or pupils, and
- self catering holiday accommodation.
The following are treated as part of the same residential unit:
- buildings such as garages used with houses
- subsidiary buildings situated a short distance away, such as a garage in a block located away from a house, and
- corridors, lifts, hallways and stairways in a residential unit.
If a charity does not make a charge, its activities are generally non-business. Supplies of fuel and power for use in such non-business activities are taxed at the reduced rate. You can find further information about charities and their business/non-business activities, in Notice 700 The VAT Guide and Notice 701/1 Charities.
If you supply fuel and power to a charity that carries out business and non-business activities on the same premises you may need to apportion your supply between qualifying use (see Section 3) and non-qualifying use. There is more about this in paragraph 3.4.
If you supply fuel or power to premises that is partly for qualifying use (see paragraph 3.1) and partly for non-qualifying use, you should charge your customer VAT at the relevant rate on the supplies you make.
If 60% or more of the fuel or power is for qualifying use, you should treat the whole supply as for qualifying use and charge tax at the reduced rate.
If less than 60% of the fuel or power is for qualifying use, you should charge VAT:
- at the reduced rate on that portion which is for qualifying use, and
- at the standard rate on that portion which is for non-qualifying use.
If you supply fuel and power for mixed use, you should obtain a certificate from your customer that declares what percentage of the fuel and power that you supply to each premises is - or will be - put to a qualifying use (see Section 3). Your customer must provide a separate certificate for each supply of fuel and power to separate premises.
The following information should be shown on the certificate:
- your name and address
- your customer’s name, address and - if applicable - VAT registration number
- the address of the premises to which your supply relates
- the amount of qualifying use expressed as a percentage of the total use. A precise percentage should always be given - do not say 'over 60%' or use any similar form of words, and
- a declaration given by a responsible officer or official of your customer as to the truth and accuracy of the facts given. This should include:
(a) the signature, name, and position of the person giving the declaration
(b) the date on which it is made, and
(c) an endorsement that the customer has read and understood the guidance, and that they know they must notify the supplier if there is a change in the qualifying use.
Your customer should retain a copy of the certificate and related calculations, schedules and any other relevant documents, so that we can see these if required. Anyone providing an incorrect certificate may be liable to a financial penalty.
If you apply the reduced rate to supplies of fuel and power incorrectly and cannot satisfy us that you have taken reasonable steps on these points, you may have to pay any VAT that you have undercharged.
7. Solid fuels
The reduced VAT rate applies to supplies of coal, coke and other solid combustible materials for a qualifying use (see Section 3) provided:
- you hold them out for sale solely as fuel, and
- they are offered in a form and at a price that is compatible with their being sold as fuel.
7.1.1 Supplies of small - de minimis - quantities
A supply of one tonne or less of domestic grade coal or coke that you hold out for sale as domestic fuel is taxed at the reduced rate. The weight limit of one tonne applies to the total delivered weight of all types of such coal or coke you supply at any one time, not to the weight of supplies of individual products, such as lignite, anthracite.
7.1.2 Wood, peat and charcoal
A supply of wood, peat or charcoal that you hold out for sale solely as fuel qualifies for the reduced rate provided that your customer does not intend to resell it. This applies regardless of the amount you supply.
Ready-cut pieces of wood of a size suitable for use as fuel - such as logs, short waste ends or damaged timber - are standard-rated if not held out for sale specifically as firewood.
“Held out for sale” as fuel means that you advertise and otherwise describe the product at its point of sale as fuel or firewood, and that this is consistent with the packaging and wrapping in which you supply it.
7.1.4 Types of solid fuel
The reduced rate applies to the following examples of solid fuels provided they are supplied for a qualifying use and are held out for sale solely as fuel, for example, supplied under a recognised trade description such as singles, “coalite” or “phurnacite”:
- barbecue fuels
- briquettes of straw and waste or other combustible material
- charcoal derived from any source (but not if you hold it out for sale as artists’ drawing charcoal)
- coal (including anthracite and lignite)
- coal briquettes
- coal dust
- firelighters - such as wood sticks, impregnated wood products, manufactured items, jelly or semi-solid fire-starters
- firewood, including off-cuts, chips, shavings, scrap or damaged wood and compressed or agglutinated sawdust
- peat blocks, sods or briquettes
- pulverised coal
- smokeless fuel
- solid metaldehyde (solid meths), and
- wood logs.
We will accept that you are selling coke if the solid fuel is a light porous substance of the residue of coal, lignite or peat. It may go under any of these brand names: Coalite, Thermabrite, Coalite Nuts, Beacon Beans, Sunbrite Small Nuts or Blazeglow (this is not an exhaustive list).
Supplies of solid fuels for non-qualifying use are standard-rated, unless the quantity supplied does not exceed the de minimis limit referred to in paragraph 7.1.1.
Generally, solid substances that you do not hold out for sale as a fuel or are unsuitable for use as fuel are standard-rated. Examples are horticultural peat or artists’ charcoal. The following items are always standard-rated:
- any product not consumed in the lighting process, such as pumice blocks, porous pottery, to be soaked in paraffin or methylated spirit, gas pokers and electric hot-air igniters
- artists’ charcoal
- binding agents, such as gum or cement, used to convert coal dust or sawdust into blocks or pieces (although the use of such binding agents in their manufacture does not affect the liability of the items themselves, and the final product may still be treated as fuel if appropriate)
- 'DIY' timber offcuts and remnants
- coke for use in manufacturing
- filtration charcoal or coke
- forestry thinnings for fencing or staking
- laboratory charcoal blocks
- peat for use in horticulture or as cattle litter, such as moss and sedge peat
- sawdust, wood chips or shavings for animal litter
- standing trees, and
- wood for pulping.