VAT & CCL Relief for Mosques and Charities — Don’t Leave Money on the Table
Many mosques and registered charities in the UK are unknowingly paying too much for their energy. Why? Because they’ve not claimed the VAT and Climate Change Levy (CCL) reliefs they’re legally entitled to. These exemptions can reduce your bills by up to 15% -money that could stay in your community, fund programmes, or maintain your facilities.
This guide explains, in plain English, how VAT and CCL relief work, who qualifies, how to apply, and how to make sure your bills reflect your entitlement. If you’re a mosque trustee, charity finance lead, or manager responsible for utilities, this is one of the simplest, most valuable savings opportunities available.
What Are VAT and CCL on Energy Bills?
Two taxes are commonly added to your business gas and electricity bills in the UK:
- Value Added Tax (VAT) – normally charged at 20% on business energy use.
- Climate Change Levy (CCL) – a government-imposed environmental tax added to energy bills to encourage reduced consumption and lower carbon emissions.
For most commercial users, both are applied automatically. But mosques, charities, and not-for-profit organisations often qualify for reduced or zero rates—if they meet certain usage and purpose criteria.
That means thousands of pounds in potential savings are being left on the table each year simply because suppliers haven’t been given the right declaration forms or usage details.
VAT Relief – When You Pay 5% Instead of 20%
The UK government allows a reduced VAT rate of 5% on energy supplied for non-business or charitable purposes. Many religious and community organisations meet this condition, at least in part.
In practice, that means a mosque or Islamic centre used primarily for worship, education, or community activity should pay only 5% VAT on its gas and electricity – not the standard 20% business rate.
How to Qualify for 5% VAT
- Your organisation is a registered charity or not-for-profit body.
- The majority of your energy use is for non-business purposes such as worship, education, or community service.
- Any commercial use (e.g., renting halls for private events) represents less than 60% of total energy use.
If more than 60% of your energy use is charitable/non-business, the entire supply can be billed at 5% VAT. If less than 60%, only the qualifying portion receives the lower rate – but it’s still worth claiming.
Typical Savings Example
Suppose your mosque spends £2,000 a month on electricity. At 20% VAT, that’s £400 in tax. With the reduced 5% rate, it’s only £100 – a £300 monthly saving or £3,600 per year. Across both gas and electricity, the savings can easily exceed £5,000 annually for a medium-sized facility.
CCL Relief – When You Pay Zero Levy
The Climate Change Levy (CCL) is an additional charge applied to most non-domestic energy supplies. However, mosques, charities, and other not-for-profit community organisations are usually exempt when energy is used for non-business purposes.
Eligibility for CCL Relief
- You’re a charity or similar non-profit organisation.
- Your energy is used mainly for non-business activity (e.g., prayer, teaching, welfare programmes).
- Energy used for trading or commercial purposes (e.g., café, gift shop, event hire) may still be subject to CCL.
Once your supplier accepts your declaration, the CCL line should disappear entirely from your bills. This can reduce costs by around 1–2p per kWh — a significant saving on annual energy use.
How to Apply for VAT and CCL Relief
To receive these reductions, your energy supplier needs a formal declaration. It’s straightforward, but often overlooked during contract renewals or supplier switches.
Step-by-Step
- Download a VAT Declaration Form – usually available on your supplier’s website or via customer support.
- Complete the charity/non-business sections – clearly describe your organisation’s purpose (e.g., mosque, educational centre, registered charity number).
- Estimate the percentage of energy used for non-business activity – worship, classes, community programmes.
- Sign and return the form to your supplier by email or post.
- Keep a copy for your audit records.
Once processed, the supplier should apply 5% VAT and remove CCL from future bills. You can also claim backdated relief for up to four years if you were incorrectly charged in the past.
Backdating – Reclaim What You Overpaid
If your organisation was billed at 20% VAT and charged CCL in error, you may be eligible to claim a refund for up to four years of overpayments. The process involves:
- Completing and submitting a VAT declaration to your supplier.
- Requesting recalculation of previous bills.
- Providing proof of charitable status and non-business energy use.
Suppliers typically issue refunds as credits on your account or direct payments. Depending on consumption, backdated claims can reach several thousand pounds — a meaningful return for any mosque or community organisation.
Common Mistakes That Cost Charities Money
- Not submitting a declaration form. Suppliers default to 20% VAT unless told otherwise.
- Assuming your broker handles it automatically. Always confirm – many brokers focus only on price comparisons.
- Not reviewing multi-meter sites. Each supply may need its own declaration.
- Failing to update after renovations or usage changes. Expanding a commercial café, for instance, can affect eligibility.
- Ignoring backdated claims. Even if your current bills are correct, historic refunds might still be owed.
These simple errors collectively cost UK faith and charity organisations millions each year. A quick audit prevents years of overpayment.
Why Mosques and Charities Are Often Overcharged
Energy suppliers usually treat accounts as “business” by default. Unless they receive proof of charitable or non-business status, the full VAT and CCL charges apply automatically. In many cases, the overcharging happens simply because:
- The meter was registered under a business category when installed.
- Suppliers inherited old data when you switched contracts.
- Declarations were never renewed or updated.
- Energy brokers didn’t ask for or file the proper forms.
Even if your energy contract is competitive, paying 15% more in tax wipes out most of your savings. Checking VAT and CCL status should always be part of your annual review or renewal process.
8. How Islamic Energy Helps
At Islamic Energy, we regularly audit client bills to ensure mosques, madrasas, and charities pay the right VAT and CCL rates. Our service is transparent, ethical, and faith-aligned – focused on stewardship and long-term savings, not short-term commissions.
- We review your latest bills for VAT and CCL accuracy.
- We complete or correct your VAT declaration forms.
- We liaise with suppliers to apply the correct rates.
- We assist with backdated refund claims up to four years.
- We ensure new contracts carry the correct tax treatment from day one.
Our goal is simple: make sure your energy spend directly supports your community, not unnecessary tax overpayments.
9. Keeping Records for Compliance
Even though reliefs are legitimate, your organisation must keep proper records in case HMRC or your supplier requests evidence. You should maintain:
- Copies of all VAT declaration forms submitted.
- Charity registration certificate or documentation.
- Breakdown of energy use (worship vs. commercial).
- Supplier correspondence confirming VAT/CCL status.
- Invoices showing corrected VAT and CCL rates.
Accurate documentation not only protects you during audits but also demonstrates strong financial governance — a core responsibility of every trustee board.
10. Key Takeaways
- VAT relief: 5% instead of 20% for non-business/charitable energy use.
- CCL relief: Zero rate for non-business purposes.
- Eligibility: Most mosques and charities qualify.
- Application: Complete and submit supplier declaration forms.
- Refunds: Backdate claims up to four years for overpaid VAT/CCL.
These reliefs are your legal right. Don’t assume your supplier or broker has applied them correctly — verify, claim, and protect your community’s funds.