VAT rate change for gas and electricity bills

Vat rate reduced to 9% for gas and electricity bills

The reduction for VAT rate on gas and electricity bills to 9%, is extended to 30 April 2025.

This article explains how to record utility bills in Sage Accounting using the reduced rate.

What the 9% VAT rate applies to

The reduced VAT rate of 9% applies to the supply of gas and electricity. This does not include home heating oil.

The reduce VAT rate is automatically applied to all heating bills issued since 1 May 2022

If you are unsure whether your transactions should be at the reduced rate, check with your accountant or the Revenue.

Which VAT rate to use

In Sage Accounting use the Second Reduced Rate 9%.

Make sure reduced rate VAT is applied correctly

Set the default VAT on ledger accounts

Consider setting the Second Reduced Rate 9% VAT rate by default on the ledger accounts you use for gas and electricity.

This will make sure that the correct VAT rate is used when entering transactions using these ledger accounts.

If you use our default chart of accounts, the ledger accounts affected are 7200 and 7210.

1. Select Settings, then Business Settings, then Chart of Accounts.
2. Use the search to find the ledger account to change.
3. Select the required ledger account.
4. Choose Second Reduced Rate from the VAT Rate drop-down.

If you use bank feeds or import your bank statement, make sure you select the Second Reduced Rate 9% when creating a transaction for your gas or electricity bill.

If you have set this as the default on the ledger account, we will select it automatically.

Recurring payments

The VAT rate on recurring payments is based on when the payment was originally created. If you have set up a recurring payment for gas and electricity bills, make sure you

1. Edit any payments that have already been created, as the VAT rate will be incorrect.

2. Stop the recurring payment. The recurring icon will no longer appear next to the transaction.

   1. Click the transaction to open the details.
   2. Choose Edit Recurring.
   3. Select Stop Recurrence.
   4. Save.

3. Set up a new payment with the correct Second Reduced Rate 9%, then make it recurring.