In short
HMRC treats caravans and self-catering holiday accommodation as residential accommodation, so energy used in them can qualify for 5% VAT and no Climate Change Levy, and where qualifying use is 60% or more of a supply the whole supply qualifies (HMRC VAT Notice 701/19). Parks also often pay all year for capacity sized for the August peak.
- Energy used in caravans, lodges and self-catering lets can be a qualifying use for 5% VAT and no levy.
- If qualifying use is 60% or more of a supply, the whole supply can be reduced-rated.
- The main supply is sized for summer but its capacity is paid for every month.
The problem
A holiday park is a small town with a seasonal population. Clubhouses, pools, shops, laundries and the supplies to caravans and lodges all draw power, and use can rise several times over between February and August.
Relief that is not being claimed
Under HMRC's rules, energy used in caravans and self-catering holiday accommodation is a qualifying use, which means it can be charged at 5% VAT with no Climate Change Levy. Where qualifying use makes up 60% or more of a supply, the whole supply qualifies. Many parks pay 20% VAT and the full levy on supplies where most of the energy goes to holiday homes, simply because the supplier was never given the right declaration.
Paying for August all year
The main intake is sized for the busiest week of summer. Its agreed capacity is charged every month, including the quiet months, and on larger supplies capacity can also set the band for fixed daily network charges.
Recharges to owners
Many parks recharge owners or guests for the electricity they use. There are rules on how much you can charge when you resell electricity, so your supply contract and your recharges need to line up.
The solution
1. Map every supply on the park
The main intake, sub-meters, clubhouse, pool and any separate supplies, with what each one feeds.
2. Check VAT and the levy
Work out how much of each supply is qualifying use, and make sure the supplier holds the right declaration. Past bills can often be corrected.
3. Check capacity against the season
Compare agreed capacity with real summer peaks and winter loads, and adjust where it is far out.
4. Line up recharges
Check that what you charge owners and guests fits Ofgem's maximum resale price rules and what your contract costs.
5. Buy together, season by season
For groups, bring every park onto one register and one end date, and set waste collections that change with the season.
Where we help
Where Business Savings Guru helps
VAT and levy checked on every supply
We check how each meter on the park is charged and help put the right declarations in place.
Capacity checked against the season
We compare the park's agreed capacity with its real summer peak and winter load.
Every park on one register
For groups, every park's supplies, rates and end dates in one place, bought together.
Seasonal waste and water
Collections that change with the season, and water retailers compared in England and Scotland.
