Reducing business energy costs with UK grants, tax relief and schemes

There are plenty of business energy grants and schemes waiting to help your small business reduce costs - there’s just not enough time in the day to find them.

Unlocking a reduced rate your small or medium business is entitled to can make a noticeable impact on your bottom line.

There is no single universal business energy grant available to all SMEs, so we’re on hand to help you track down the support you could be eligible to claim.

In this article:

• Learn which UK grants, reliefs and schemes can help small businesses.
• Understand how to find reliable information on available support.
• Discover which schemes could reduce your costs today.

What support is available to UK business energy customers?

Support is offered through a patchwork of various reduced tax rates, grants, schemes and local funding.

Many of the currently available grants and reliefs are based around investment in renewable energy technologies and reducing reliance on fossil fuels.

Of course, the quickest way to reduce your business energy costs is to reduce your energy usage, and you can find out more in our simple guide to business energy, but we know this isn’t always possible. Some switches simply can’t be turned off.

For that reason, ensuring you’re making the most of the various schemes available to UK SMEs is crucial to keeping your costs in check without necessarily using a single unit of energy less.

Reduced rate VAT

The reduced [Value Added Tax (VAT)] rate is one of the most fundamental tax reliefs your business may qualify for. Before anything else, ensure you’re paying the correct VAT rate.

VAT is applied to most goods and services in the UK at a standard rate of 20%. Business energy is also subject to the same rate.

However, domestic energy VAT rates are capped at 5%. Your business may also be eligible for the reduced rate if they fall into one of the following categories:

• Your organisation is a low user of energy (electricity and gas supplies are assessed separately. Low usage is defined as less than 1,000 kWh/month electricity or less than 4,397 kWh/month gas).
• Charities using energy for charitable activities.
• Village halls and community centres.
• Places of worship.
• Residential care homes.
• Hospices.
• Non-profit organisations.

If you pay the lower VAT rate, you should also qualify for the next discount on our checklist.

Find out more differences between business and domestic energy in our guide.

Climate Change Levy (CCL) discount

Checking your Climate Change Levy (CCL) rate is a potential quick win to reduce your business energy costs.

All businesses in the industrial, commercial, agricultural or public services sectors will pay CCL on electricity and gas bills unless you are a charity or low user (same definition as VAT)

Eligible businesses can significantly reduce their CCL costs by entering a climate change agreement (CCA) with the government.

This means businesses voluntarily agree to reduce their energy usage and carbon emissions with the Environment Agency.

A valid CCA allows businesses to access the following discounts on your CCL rate:

• 92% reduction for electricity.
• 86% reduction for gas.
• 77% reduction for liquefied petroleum gas (LPG).
• 86% reduction for coal and other solid fossil fuels.

Boiler Upgrade Scheme (BUS)

The Boiler Upgrade Scheme (BUS) is primarily designed for domestic properties, with limited eligibility for small non-domestic buildings in specific cases.

Eligible businesses can apply for:

• £7,500 off the cost and installation of heat pumps.
• £5,000 off the cost and installation of biomass boilers.

Business rates support for green technology

Businesses that invest in renewable energy technology may be able to reduce their business rates bill. The scheme is open until 31^st March 2035.

Eligible equipment includes technologies such as solar panels, wind turbines and battery storage systems installed on site. Relief is also available for some low-carbon heat networks and vehicle charging points.

The aim is to encourage businesses to invest in energy-saving and low-carbon technologies without being penalised through higher business rates.

Local authority grants and schemes

Contacting your local authority is the first step towards accessing various energy grants available to businesses in your region.

Support varies between regions, meaning there’s no one-size-fits-all grant for SMEs to access.

Many of the available loans, grants and subsidised energy-saving measures are centred around supporting small businesses reduce their environmental impact through lower energy usage and renewable solutions.

You may need to provide your local authority or business innovation fund with a business case to unlock their benefits.

The UK Shared Prosperity Fund (UKSPF) is often used by local authorities to support SME energy efficiency upgrades such as lighting, insulation, and low-carbon improvements, depending on regional priorities.

How to access business energy grants and schemes

In most cases, you can check out GOV.UK, including their business support finder, or contact your local council for more information on how to actually join these schemes or if you think you may be eligible for discounted rates.

You can also speak to accredited installers, experts in specific fields such as solar, HVAC or insulation. Your business energy suppliers may also know about various schemes to suit your business.

How we can help

Business energy is confusing. You know you need to stay on top of such a major cost, but that can be difficult while focusing on running your business and serving your customers.

We get it. We can support you.

Troo exists to help businesses like yours make sense of their energy needs, simplify complex information and make smart decisions that lead to real change and reduced costs.

We are not here to sell you a quick fix. We're here to understand what matters to you, offer clear advice, and take ownership of the hard parts, so energy becomes one less thing to worry about.

Book a free energy health check today for practical guidance on your business electricity, gas or water bills.