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Nearly half of UK charities may be giving too much money to the taxman

Charities and non-profit organisations need to take action to make sure they're on a lower VAT rate for their gas and electricity bills.

Are you involved in the running of a charity?

If so, did you know that most charities - whether they're registered or not - qualify for a reduced 5% VAT rate on the gas and electricity they use?

Not to worry if you didn't - you are in good company. Not so long ago we conducted some research that showed 46% of charities don't know this gem of information. This effectively means that it is left to chance whether they are paying the correct rate - because it's not something that energy suppliers are proactive about checking on their behalf.

Worryingly, even some of those that are in-the-know end up paying too much. We spoke to a charity this year who discovered that their suppliers had made an error that meant the charity, despite having dealt with the issue in the past and been put on the lower VAT rate, somehow reverted back to paying the standard business VAT rate of 20%.

Our four-page energy guide for charities
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(PDF file, 241 KB)

Here's another big incentive to make sure that your charity is on the correct rate: those that have been overcharged on VAT can claim a rebate from their energy companies for up to four years back. That could result in a very sizeable cheque that can go straight towards your charity's causes.

The Bosco Society in Bootle, for example, managed to arrange a rebate of £2,000. This helped towards the cost of providing accommodation for homeless people with a history of drug abuse.

The Society for Abandoned Animals in Manchester, meanwhile, managed to save £1,200 a year by successfully claiming the discount. The extra money went towards veterinary bills, vaccines and microchips.

Some customers that we have helped with their VAT rebate have received over £20,000 as a result and this, like the energy price comparison we do for 5,000 charities a year, is a service that we offer free of charge. As far as the VAT goes, it's just a matter of filling out a form and sending it to your supplier.

Whichever category you fall into, it is worth checking your energy bill to see what rate of VAT you are being charged. If you're in any doubt, call us on #phonenumber# or download our guide to getting on the right VAT rate. We also provide a VAT Declaration form template that you can download, complete and send to your supplier to get the ball rolling.