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Whether or not your business is charged VAT on water usage depends on your Standard Industrial Classification (SIC) code.
SIC codes are used by government bodies, such as Companies House and the Office for National Statistics, to systematically identify and categorise the principal business activities of limited companies.
In essence, most industrial businesses will be subject to VAT on their water bill and those that are non-industrial will not.
Industries that are typically subject to VAT on their water bills include:
To ensure you are paying the correct VAT charges on your business water bills, let your business water retailer know your SIC code. If you do not inform your retailer of your SIC code, whatever your business, they are obliged to charge VAT on your commercial water services by default.
Castle Water customers can log in or register to update a business SIC code in the customer portal.
Whether you pay VAT on water bills for business depends on your Standard Industrial Classification (SIC) code. VAT will be charged on your water supply if your main business activity falls into one of the following five divisions:
You will not pay VAT on your water supply if your main business activity falls into one of the following five divisions:
Although for most businesses the Standard Industrial Classification activity codes were updated to a 5-digit number in 2007, HMRC has chosen the 1980 3-digit Standard Industrial Classification activity codes as a method of identifying which groups of customers must be charged VAT on their water services.
HM Revenue and Customs requires Castle Water to ensure that we are correctly charging VAT on water services. If you do not inform us of your SIC code, we are required by HMRC to charge VAT by default on your water services.
Your SIC code is used to see if we must charge VAT on the water we supply to you, however, different rules apply to our other charges. Our wastewater charges are normally ‘Zero Rated’, but VAT may be applied to our charges for making new water and sewer connections, but this depends on the type of building that we are supplying.
If you have several sites, the SIC code for your largest business activity must be applied to all of your sites, including domestic properties. Please do not change the SIC code for the business activity conducted at each site.
If you think your business is being wrongly charged VAT on your water bills, you need to tell your water supplier your SIC code. Not impressed with your current water supplier? Many people don’t know how easy it is to switch – which is always an option. In any case, make sure you are paying the right amount of VAT.
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