In short
Most care groups overpay for three reasons: homes charged 20% VAT and the Climate Change Levy when they qualify for 5% and no levy, homes acquired on out-of-contract rates, and contracts that end on different dates so the group never buys as one. Each can be checked from the bills you already have.
- Energy used in a care home is usually a qualifying use: 5% VAT and no Climate Change Levy (HMRC VAT Notice 701/19).
- Homes bought in the last year are the most likely to be on expensive out-of-contract or deemed rates.
- Putting every meter on one register and bringing end dates together lets the group buy as one portfolio.
The problem
A care home never closes. Heating, hot water, laundry, kitchens and lifts run every hour of every day, so a care home uses energy at a steady rate that most suppliers price very differently from an office. On top of that, three problems turn up again and again when we look at a care group's bills.
Homes charged business VAT and the levy
Fuel and power used in residential accommodation, which includes most care homes, is a qualifying use for the reduced 5% VAT rate, and supplies for that use are excluded from the Climate Change Levy. The supplier only applies the relief when it holds a declaration from you. When a home changes supplier, changes owner or adds a new meter, that declaration is easily lost, and the home goes back to 20% VAT and the full levy (0.801p per kWh from 1 April 2026).
Homes bought on someone else's contract
Care groups grow by acquisition. When you take over a home, its energy supply does not move to your group contract on its own. It either stays on the previous owner's terms until they end, or moves onto the supplier's deemed or out-of-contract rates, which are usually much higher than a negotiated price. Nobody notices until the first large bill arrives.
Contracts that never line up
A group of ten homes often has ten electricity contracts, ten gas contracts and a scatter of water and waste agreements, each ending on a different date with a different notice period. Every renewal becomes a one-off, so the group never gets the buying power of its whole portfolio, and at least one contract is usually rolling over on poor terms.
The solution
1. Put every meter on one register
List every supply in the group: meter number, supplier, unit rate, standing charge, end date, notice period and who holds the contract. This alone usually reveals the homes that are out of contract.
2. Check VAT and the levy on every bill
Compare what each home is being charged against what it qualifies for. Where it is wrong, the supplier needs the right declaration, and past bills can often be corrected.
3. Fix the acquired homes first
Move any home on deemed or out-of-contract rates onto a proper contract straight away, even a short one, so it stops costing more while the rest of the plan comes together.
4. Bring the end dates together
As each contract expires, renew it to a common end date. Within one contract cycle the whole group can be tendered at once, on the same terms, and compared on total yearly cost.
5. Do water and waste at the same time
Laundry, bathing and kitchens make water one of the larger bills in a care home. In England and Scotland a care home can choose its water retailer, and waste contracts can be brought onto the same register.
Where we help
Where Business Savings Guru helps
Every home on one register
We list every meter across the group with its supplier, rate, end date and notice period, and flag anything out of contract.
VAT and levy checked on every meter
We check each home is charged correctly and help you put the right declaration in place where it is not.
One tender for the group
As contracts expire we bring them to a common end date, then tender the whole portfolio on total yearly cost.
Water and waste in the same review
Laundry and kitchens make water a large bill. In England and Scotland we compare retailers alongside the energy.
