Need help with Payroll Year End? Visit our help hub
Ask your Making Tax Digital (MTD) questions in our community drop-in session
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Have a question about Payroll Year End? - Ask it here!
NeilC1
Level 2

VAT rate for electricity is 20%(UK). But when I enter into QB it only gives me the option of 5%R or 20%S. Should it not be 20%R?

When I try to make a rule, it only gives me the option of 5%, but if I edit it on the banking page 'for review' it allows me to enter 20% purchases, which is correct?
Solved
Best answer November 23, 2019

Accepted Solutions
paul72
Level 7

VAT rate for electricity is 20%(UK). But when I enter into QB it only gives me the option of 5%R or 20%S. Should it not be 20%R?

Hi NeilC1.

 

VAT on electricity (& energy in general) actually depends on consumption.  You should check your invoice to see which rate you've been charged.

 

Standard rate is 20% = 20.0%S in QB.

Reduced rate is 5% = 5.0%R in QB.

 

Fuel and power (VAT Notice 701/19)

https://www.gov.uk/guidance/vat-on-fuel-and-power-notice-70119

 

5.2 Supplies of small (de minimis) quantities
Supplies of not more than an average rate of 33 kilowatt hours per day, 1,000 kilowatt hours per month, of electricity to one customer at any one of the customer’s premises are subject to VAT at the reduced rate. This applies whether the bill is based on a meter reading by either you or your customer or on an estimate.

If your usage is below 1000kWh per month you will be charged at the reduced rate.

View solution in original post

6 REPLIES 6
John C
QuickBooks Team

VAT rate for electricity is 20%(UK). But when I enter into QB it only gives me the option of 5%R or 20%S. Should it not be 20%R?


Hi NeilC1

 

The standard 20% rate for the UK is named 20.0%S within QuickBooks. We presume that when you refer to making a rule you are doing sol from the banking page > riles? If you are you should be able to select 20.0%S.

NeilC1
Level 2

VAT rate for electricity is 20%(UK). But when I enter into QB it only gives me the option of 5%R or 20%S. Should it not be 20%R?

Thank you

 

I was a bit confused over the options offered on one page and then a different option on another page.

 

Cheers

Neil

paul72
Level 7

VAT rate for electricity is 20%(UK). But when I enter into QB it only gives me the option of 5%R or 20%S. Should it not be 20%R?

Hi NeilC1.

 

VAT on electricity (& energy in general) actually depends on consumption.  You should check your invoice to see which rate you've been charged.

 

Standard rate is 20% = 20.0%S in QB.

Reduced rate is 5% = 5.0%R in QB.

 

Fuel and power (VAT Notice 701/19)

https://www.gov.uk/guidance/vat-on-fuel-and-power-notice-70119

 

5.2 Supplies of small (de minimis) quantities
Supplies of not more than an average rate of 33 kilowatt hours per day, 1,000 kilowatt hours per month, of electricity to one customer at any one of the customer’s premises are subject to VAT at the reduced rate. This applies whether the bill is based on a meter reading by either you or your customer or on an estimate.

If your usage is below 1000kWh per month you will be charged at the reduced rate.

Cidonline
Level 1

VAT rate for electricity is 20%(UK). But when I enter into QB it only gives me the option of 5%R or 20%S. Should it not be 20%R?

But isn't the crunch that you cannot actually reclaim the VAT on electricity for your business whatever the rate charged? "Gas and electricity tariffs for businesses automatically have VAT added to them, and while they technically count as a business-to-business purchase, you won’t be able to claim the tax back." So, should the VAT rate be entered as 0 %??

MirriamM
Moderator

VAT rate for electricity is 20%(UK). But when I enter into QB it only gives me the option of 5%R or 20%S. Should it not be 20%R?

Welcome to the thread, @Cidonline.

 

You can enter vat rate as zero when goods and services as zero rated. This means that the goods are still VAT-taxable but the rate of VAT you must charge your customers is 0%. 

 

For further clarifications, I suggest contacting HMRC to ensure you'd able to enter the correct rate. I'm also adding this great resources for additional reference: 

Let me know in the comment section if you have additional questions. I’m always here to help. Enjoy your day!

paul72
Level 7

VAT rate for electricity is 20%(UK). But when I enter into QB it only gives me the option of 5%R or 20%S. Should it not be 20%R?


@Cidonline wrote:

But isn't the crunch that you cannot actually reclaim the VAT on electricity for your business whatever the rate charged? "Gas and electricity tariffs for businesses automatically have VAT added to them, and while they technically count as a business-to-business purchase, you won’t be able to claim the tax back." So, should the VAT rate be entered as 0 %??


???

er, no!!

 

Either that quote is out of context or the author has no idea what they're talking about - but, hey, isn't that what the internet's all about?!

(I can see it's from moneysupermarket - but that doesn't make it any less wrong & probably moves it into the dangerously wrong category in my eyes)

 

Of course, there are exceptions to every rule but VAT on goods & services is recoverable where that purchase is for business use.

 

https://www.gov.uk/reclaim-vat gives a brief example for a home-office...

   Examples

      Half of your mobile phone calls are private. You can reclaim 50% of the VAT on the purchase price and the service plan.

      You work from home and your office takes up 20% of the floor space in your house. You can reclaim 20% of the VAT on your utility bills.

& lists examples of what you cannot reclaim...
You cannot reclaim VAT for:

  • anything that’s only for private use;
  • goods and services your business uses to make VAT-exempt supplies;
  • business entertainment costs;
  • anything you’ve bought from an EU country (you may be able to reclaim VAT charged under the electronic cross-border refund system);
  • goods sold to you under one of the VAT second-hand margin schemes;
  • business assets that are transferred to you as a going concern.

 

https://www.gov.uk/guidance/vat-on-fuel-and-power-notice-70119 states that "For VAT purposes the supply of heat, power, refrigeration or ventilation is a supply of goods (VATA 1994 Schedule 4 paragraph 3). As such the rules surrounding time and place of supply are those associated with goods rather than for services."

It also gives an example where the VAT would not be recoverable...

The tax incurred by the landlord on buying in the fuel or power used to heat or cool the accommodation is the landlord’s input tax, but may or may not be recoverable depending on how the partial exemption provisions apply to the landlord. For example, if the rent charged is payment for an exempt supply, the tax the landlord incurs in making that supply is exempt input tax, and exempt input tax is not recoverable.

 

Need to get in touch?

Contact us