By August 3, 2012 Read More →

Making your energy tariff work for you if you work from home

Today’s guest post is by Lauren Pope, editor at Energy Forecaster, a community dedicated to helping businesses get on top of energy issues:

Running your business from home can be a smart choice when it comes to keeping costs down, but not everyone who does so makes such smart choices when it comes to energy bills.

There’s nothing wrong with the simple option of sticking with your normal domestic energy tariff, but you could be missing out on some big savings that will only take you a bit of time to achieve.

So how do you do it? Well, the prices businesses pay for energy tend to be considerably cheaper, as this chart shows:

Business Juice energy chart

And the good news is you can still get these low prices if you run your business from home.

There are a few criteria you’ll need to fulfill to switch to a business tariff:

1. You need to use 50% of your energy for business purposes. 50% is a good benchmark, but energy suppliers do have their own rules. You can check this by taking meter readings at the start and finish of the working day for a week and calculating the proportion used while you’re working.

2. You need to be registered as a business. The energy supplier will want to see proof that you really do run a business, like a website or a compliment slip.

3. You need to be sure. Switching to a business tariff is a commitment. You don’t need to get a new meter to switch to a business tariff, but your meter can’t be switched back again, so if you want to go back to a domestic tariff at some point you’ll have to have a new meter installed, which you might be charged for. Also, unlike a domestic energy tariff where you can pay to get out of a contract, with a business tariff, you can’t switch while you’re still in a contract, unless you pay the full value of the contract outright.

If you want to make the switch, then using an independent business energy broker is a good idea. They will be able to compare prices from across the market and make sure you’re getting a competitive price. A good broker will be able to handle the switch to a business energy tariff on your behalf (including the paperwork and negotiations) so the whole process runs smoothly.

And finally, whether you’re on a business or a domestic energy tariff, you can claim the electricity and gas you use while you’re working at home as a business expense. You can claim for your energy usage by the proportion of the area of your house that your office/workspace occupies, or by the amount of your energy usage your business accounts for.

Posted in: Saving money

3 Comments on "Making your energy tariff work for you if you work from home"

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  1. This sounds great… but I’d be worried about potential Capital Gains Tax issues. You can be subject to CGT if you are using one particular area of your home for business. As a result if you work from home it’s often advised to claim less than say 25% of household bills and work across more than one room. Claiming 50% of power bills would make it very difficult to argue that part of the house wasn’t a permanent business location and therefore subject to CGT. I know people who’ve been massively hit by CGT, it’s a serious issue. If there’s a way around that for power bills that would be great and maybe you could say more about that.

  2. Lauren Pope says:

    This is something that I wasn’t aware of – so thanks for flagging it up and it sounds like it’s definitely something to be mindful of before you make a decision about switching.

    I think the proportion of your energy usage that’s used for your business is more significant than the area of you home your business takes up.

    For example if you were running a home bakery and had your oven running all day, you could quickly find your business taking up 50% of your energy bill, even though your kitchen only occupies 20% of the floor space of your home.

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