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.


2. Vat liability of fuel and power - overview

2.1 Reduced-rated supplies

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:

2.2 Extent of the reduced rate

Any of the charges listed below are part of the payment for a supply of fuel and power, provided they are:

If the supply is for qualifying use (see Section 3) the reduced rate applies.

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.

2.3 Standard-rated supplies

The following supplies are standard-rated:

2.4 Supplies which are outside the scope of VAT

The following charges are outside the scope of VAT:

2.5 Supplies for which apportionment is required

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.)

2.6 Connecting dwellings and certain other buildings to mains power

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.

2.7 Climate Change Levy (CCL)

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:

Taxable commodities are:

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.

3. Qualifying use

3.1 What is 'qualifying use'?

Qualifying use means:

3.2 What is 'domestic use'?

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:

The following are treated as part of the same residential unit:

3.3 What is 'charity non-business use'?

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.

3.4 Mixed use

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:

3.5 Certificates

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 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

7.1 What supplies are taxed at the reduced rate?

The reduced VAT rate applies to supplies of coal, coke and other solid combustible materials for a qualifying use (see Section 3) provided:

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.

7.1.3 Firewood

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”:

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).

7.2 What supplies are standard-rated?

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:

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