Overview

This bill proposes to exempt supplies of electricity, oil, and gas used for domestic purposes from Value Added Tax (VAT) in the United Kingdom.

Description

The Domestic Energy (Value Added Tax) Bill amends the Value Added Tax Act 1994. It creates a new VAT exemption category ("Group 17") for domestic supplies of:

• Coal gas, water gas, producer gases, or similar gases;
• Petroleum gases, or other gaseous hydrocarbons (liquid or gas);
• Fuel oil, gas oil, or kerosene;
• Electricity.

The exemption applies only to supplies for "qualifying use," defined as domestic use or use by a charity outside of business activities. Specific thresholds are set for deemed domestic use based on consumption levels of gas and electricity. For mixed-use supplies, a 60% threshold determines whether the entire supply qualifies for the exemption. The bill also mandates that the Treasury adjust the reduced VAT rate schedule (Schedule 7A) to reflect this change.

Government Spending

The bill is expected to reduce government revenue from VAT. The exact amount is not specified in the provided text, but will depend on the volume of domestic energy consumption that is currently subject to VAT.

Groups Affected

This bill will directly affect:

• Domestic energy consumers: They will likely see a reduction in their energy bills due to the removal of VAT.
• Energy suppliers: They will need to adjust their billing systems to reflect the VAT exemption.
• The UK Treasury: Will experience a reduction in tax revenue.
• Charities: May benefit from reduced energy costs if their energy use qualifies for the exemption.

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