Business utilities: key facts
- Business energy is not covered by Ofgem's energy price cap; prices are set in your contract.
- Most business energy contracts are fixed-term, usually with no cooling-off period.
- Without a contract you are usually on out-of-contract or deemed rates, which tend to cost more.
- Business energy normally carries VAT at 20%; 5% applies below 33 kWh a day of electricity or 145 kWh a day of gas.
- Microbusinesses get extra Ofgem protections, including a 12-month back-billing limit.
- Brokers are usually paid commission built into your unit rate or standing charge.
- The deadline for moving copper landlines to digital is 31 January 2027.
- Business Utilities Hub is an introducer and doesn't give advice.
What are business utilities?
Business utilities are the essential services a business pays for to keep its premises running: electricity, gas, water, waste collection, phone lines, broadband and, for many firms, card payment machines and mobile phones. They are bought on business contracts, which work differently from household ones.
Every business with premises pays for a set of utilities. The main ones are:
- Electricity for lighting, refrigeration, cooking and machinery.
- Gas for heating, hot water and cooking, where the premises are connected to the gas grid.
- Phone lines and broadband for calls, internet, card payments and alarms.
- Water and wastewater, billed by a water retailer in England and Scotland.
- Waste and recycling collections, which businesses have to arrange and pay for themselves.
- Card machines, business mobiles and fuel cards.
Because these are bought as a business, the contracts, taxes and protections are not the same as for your home. This site explains how each utility works for businesses, then what is different for particular sectors.
For now we can pass on quote requests for business energy and business phones and broadband.
How is business energy different from home energy?
Business electricity and gas are not covered by the Ofgem price cap, are usually sold on fixed-term contracts with no cooling-off period, normally carry 20% VAT and the Climate Change Levy, and come with fewer consumer protections than household energy.
| Topic | Home energy | Business energy |
|---|---|---|
| Price cap | Standard variable tariffs are limited by Ofgem's energy price cap | No price cap. The price is whatever you agree with the supplier |
| Contract type | Variable or fixed tariffs, usually easy to leave | Usually fixed-term, often one to three years |
| Cooling-off | 14-day cooling-off period for contracts agreed at a distance | Usually none |
| VAT | 5% | Usually 20%, unless your use is below the small-use thresholds |
| Climate Change Levy | Not charged | Usually charged on business electricity and gas |
No price cap
Ofgem's price cap only covers household energy. For a business, the unit rate (pence per kWh) and the standing charge (pence per day) are set in the contract, so two similar businesses can pay very different prices.
Fixed-term contracts and no cooling-off
You agree a price for a set period and are expected to stay for it; leaving early can mean exit fees. A recorded verbal agreement on the phone can be binding, so ask for the terms in writing first.
VAT and the Climate Change Levy
Business energy normally carries VAT at the standard rate of 20%. The reduced rate of 5% applies where use is small enough to count as "de minimis": as a rough guide, up to 33 kWh of electricity a day or 145 kWh of gas a day. Some charity and residential uses also qualify. Ask your supplier if you think you do.
The Climate Change Levy (CCL) is a government environmental tax on most business electricity and gas. Supplies under the de minimis thresholds are generally exempt.
Standing charges
The standing charge is a fixed daily amount you pay whatever you use. A low unit rate with a high standing charge can cost a small user more, so compare both.
Our business energy guide has more detail.
What are out-of-contract and deemed rates?
Out-of-contract rates apply when a fixed business energy contract ends and no new one is agreed. Deemed rates apply when you use energy at premises without having agreed any contract, for example after moving in. Both are typically higher than negotiated contract prices.
- Out-of-contract rates. If your fixed contract ends and you have not agreed a new one, your supplier will usually keep supplying you, but on its out-of-contract prices. Some contracts roll over into a new term if you don't give notice in time.
- Deemed rates. If you take over premises and start using energy without agreeing a contract, the supplier already connected treats you as being on a "deemed contract".
Suppliers set these rates themselves, and they are typically higher than negotiated contract prices because neither side has committed to a fixed term. Staying on one for months can add up.
What is a microbusiness, and what protections do you get?
Under Ofgem's rules, a microbusiness has fewer than 10 employees and an annual turnover or balance sheet of up to €2 million, or uses less than 100,000 kWh of electricity or 293,000 kWh of gas a year. Microbusinesses get extra protections, including a 12-month limit on back-billing.
Your business counts as a microbusiness if it meets either test:
- it has fewer than 10 employees (or full-time equivalents) and an annual turnover or balance sheet total of no more than €2 million; or
- it uses less than 100,000 kWh of electricity a year, or less than 293,000 kWh of gas a year.
Protections include:
- A limit on back-billing. Suppliers generally cannot bill you for energy used more than 12 months ago if the delay was their fault.
- Clear contract information. Suppliers must give you the key terms, including the end date and how to give notice.
- Broker costs shown on the contract. Since 1 October 2024, suppliers must show any broker fees in the main terms of every business energy contract.
- Complaints. Unresolved complaints about a supplier can go to the Energy Ombudsman. Under Ofgem rules, suppliers should only work with brokers that belong to an Ofgem-approved dispute resolution scheme, such as the Energy Ombudsman.
Some protections also cover small businesses above the microbusiness limits. Check Ofgem's website for which rules apply to you.
When should a business switch or renew its energy contract?
The best time to look is during the renewal window before your current contract ends. Many suppliers let you agree a new contract several months in advance, so you are not left on out-of-contract rates.
Because you are usually locked in until the end date, timing matters:
- Find your contract end date. It should be on your bills; if not, ask your supplier.
- Check your notice terms. Some need written notice to stop a rollover.
- Start looking early. Many suppliers let you agree a new contract months ahead; it starts when the old one ends.
- Gather your details. Quotes need your meter numbers (MPAN for electricity, MPRN for gas) and annual use, both on a recent bill.
- Compare like with like. Look at the unit rate, the standing charge, the contract length, broker commission and exit terms.
If you are already out of contract or on deemed rates, you can usually agree a new contract straight away.
How are business energy brokers paid?
Most business energy brokers are paid commission by the supplier, usually built into the unit rate or standing charge you pay. The service can look free, but the cost is in your prices, so it is reasonable to ask how much the broker will earn.
A broker compares supplier prices for you and helps you agree a contract. Few charge a fee directly; most are paid commission by the supplier, added to your unit rate, your standing charge or both. So a "free" service is paid for through your prices over the contract. A good broker can save you time, but you should know what you pay. Ask a broker:
- how they are paid, and roughly how much commission is included in the quote;
- whether they belong to an Ofgem-approved dispute resolution scheme.
For smaller businesses, the broker's costs must be shown on the contract. Read it before you agree.
What do businesses need to know about phones and broadband?
The UK's old copper phone network (the PSTN) is being switched off and replaced with digital lines that run over broadband. Openreach stopped selling new copper lines nationally in September 2023, and the deadline for moving remaining lines is 31 January 2027.
After the switch, calls run over an internet connection, as a VoIP (voice over internet protocol) service or a digital voice line with your broadband. For most phones the change is simple. The risk is other equipment that uses the line.
Equipment that may be affected
- Intruder and fire alarms that call a monitoring centre.
- Older card payment terminals that connect over a phone line.
- Lift emergency phones and door entry systems.
- Fax machines and franking machines.
- Some CCTV, telecare and monitoring equipment.
If any of these use a landline, ask the installer or provider whether they will work on a digital line or need upgrading. Don't leave it until the last minute.
Choosing business broadband
Business packages often add faster fault repair, static IP addresses and backup connections. What you can get depends on your address. See our business phones and broadband guide.
How can one form get quotes for several business utilities?
Our quote form lets you tick each utility you want quotes for. We pass your details, with your consent, to the business energy broker and/or telecoms provider we work with for each one, and they contact you directly.
You give your details once and tick what you want:
- Business energy (electricity and gas): your request goes to a business energy broker we work with.
- Business phone lines and broadband: your request goes to a telecoms provider we work with.
Each company will contact you, usually by phone, and may ask for a recent bill. You don't have to accept any quote.
Business utilities guides by sector
Different businesses use utilities in very different ways, so we write separate guides for each sector. Our first sector is pubs, with more on the way.
A pub with cellar cooling and late hours has different needs from a salon or a farm, so our sector guides cover the equipment, hours and rules for each.
Pubs and bars
- Utilities for pubs: an overview of energy, phones and broadband for pubs and bars.
- Business energy for pubs: cellar cooling, kitchens, late hours and contracts.
- Phones and broadband for pubs: card machines, alarms, Wi-Fi and the copper switch-off.
Coming soon
We are working on guides for more sectors, including restaurants, cafés, bakeries, care homes, hotels, gyms, salons, garages and farms.
What about water, waste and other business utilities?
We plan to cover business water, waste, card machines, business mobiles and fuel cards. For now we can only pass on quote requests for business energy and for phones and broadband.
We can't take quote requests for these yet.
Business water
Most businesses in England can choose who bills them for water and wastewater services. The non-household water retail market in England opened in April 2017, and Scotland opened its business water market in 2008. Your regional water company still supplies the water; the retailer handles billing and service.
Business waste
Businesses must arrange their own waste collection. In England, the Simpler Recycling rules apply to businesses from 31 March 2025: most workplaces must separate dry recycling, food waste and general waste. Very small businesses with fewer than 10 full-time equivalent employees have until 31 March 2027.
Card machines, business mobiles and fuel cards
We plan to add guides and quote options for these too.
How Business Utilities Hub works
Business Utilities Hub is an introducer. We publish free guides and, if you ask for quotes and agree, pass your details to business energy brokers and telecoms providers we work with. We may be paid by them for each introduction. We don't give advice.
- We are not a supplier, broker or telecoms provider. We don't sell energy, phone lines or broadband, and we don't compare prices ourselves.
- We don't give advice. Our guides are general information, not a recommendation of any supplier or product.
- We pass on your details only with your consent. When you fill in the form and tick the consent box, we send your details to the business energy broker and/or telecoms provider we work with, for the services you ticked.
- We may be paid for introductions. The brokers and providers we work with may pay us when we pass on your enquiry. Using our site is free, but brokers' own commission is usually included in the prices they quote.
- Complaints. Every business energy broker we work with belongs to an Ofgem-approved dispute resolution scheme. If you have a problem with our service, email us.
See our privacy policy for details.
Related guides
Business utilities: frequently asked questions
What are business utilities?
Business utilities are the services a business needs to run its premises, mainly electricity, gas, water, waste collection, phone lines and broadband. They are bought on business contracts, which work differently from household ones.
Can I compare business utilities in one place?
Yes. Our quote form lets you tick business energy, business phones and broadband, or both. With your consent we pass your details to a business energy broker and/or telecoms provider we work with,, who contact you with quotes.
Is business energy covered by the energy price cap?
No. Ofgem's energy price cap only applies to household energy. Business electricity and gas prices are whatever you agree in your contract with the supplier.
Is there a cooling-off period on business energy contracts?
Usually not. Business energy contracts, including ones agreed verbally on a recorded phone call, are normally binding once agreed.
What VAT do businesses pay on energy?
Business energy is normally charged VAT at 20%. The reduced 5% rate applies to small amounts of use, as a rough guide up to 33 kWh of electricity or 145 kWh of gas a day.
What happens when my business energy contract ends?
If you don't agree a new contract, your supplier will usually move you onto its out-of-contract rates, which tend to cost more. Check your notice terms well before the end date.
What counts as a microbusiness for energy?
Under Ofgem's rules, a microbusiness has fewer than 10 employees and a turnover or balance sheet of up to 2 million euros, or uses less than 100,000 kWh of electricity or 293,000 kWh of gas a year.
How do business energy brokers get paid?
Most brokers are paid commission by the supplier, usually built into your unit rate or standing charge. Ofgem rules require suppliers to show broker fees in business energy contracts signed since 1 October 2024.
When does the landline switch-off happen?
Openreach stopped selling new copper phone lines nationally in September 2023, and the deadline for moving the remaining copper lines to digital services is 31 January 2027.
Can you give me quotes for business water or waste?
Not yet. At the moment we can only pass on quote requests for business energy and for business phones and broadband.
Does Business Utilities Hub give advice?
No. We are an introducer, not a supplier, broker or telecoms provider; our guides are general information only. Brokers and providers we pass enquiries to may pay us.