Overview

This bill proposes to exempt domestic supplies of electricity, oil, and gas from Value Added Tax (VAT) in the UK. This aims to reduce the cost of energy for households.

Description

The bill amends the Value Added Tax Act 1994 to create a new VAT exemption for domestic energy supplies. This includes electricity, various gases (excluding road fuel gas), and certain types of oil and kerosene (excluding those subject to excise duty). The exemption covers domestic use and certain charitable uses, with specific thresholds and definitions for determining whether a supply qualifies. For example, a household's energy consumption must be below specified limits to qualify fully for the exemption, with apportionment applied if usage exceeds these limits. The Treasury is tasked with making consequential amendments to other relevant regulations.

Specific Exemptions and Definitions:

• Precise definitions of "fuel oil," "gas oil," and "kerosene" are provided to clarify which types are included in the exemption.
• The bill defines "qualifying use" as encompassing domestic use and usage by charities outside of their business activities.
• Specific thresholds are defined, for instance, monthly gas and electricity usage limits, to determine eligibility for the full exemption.
• The bill specifies conditions for supplies of petroleum gas (in liquid and gaseous states), outlining quantity limits for the exemption.

Government Spending

The bill will likely increase government spending due to the loss of VAT revenue from domestic energy supplies. The exact figure is difficult to predict without further analysis but it will be substantial.

Groups Affected

• Households: Will potentially benefit from lower energy bills due to the removal of VAT.
• Energy Suppliers: Will need to adjust their billing systems to reflect the VAT exemption.
• Charities: Those using energy for non-business purposes may benefit from reduced energy costs.
• UK Treasury: Will experience a reduction in VAT revenue.

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