Do I pay VAT on my water bill?

Most businesses don’t pay VAT on their water, but we’ll explain the businesses that do and don’t, and what to do if you think you’re being incorrectly charged.

Who pays VAT on their water bills?

Certain businesses pay VAT (Value-Added Tax) on clean water. Whether you have to pay it depends on the industry your business is in. Generally, VAT is paid by industrial businesses in divisions one to five of the 1980 SIC code list. That means businesses in these industries:

  • Utilities
  • Textiles
  • Mining
  • Manufacturing
  • Engineering
  • Construction
  • Chemicals


Do businesses pay VAT on waste water?

No, VAT is only charged on fresh water.


How much VAT will I be charged?

If you fall into one of the categories listed above, you’ll usually pay the standard VAT rate of 20%. If you don’t fall into SIC code categories one to five, then you won’t pay an VAT.


What are SIC codes?

Standard Industry Classification (SIC) codes are what’s used by the Office of National Statistics to describe the main business activity of a company. In the water industry, the VAT rules say we have to refer to the 1980 edition of the list.

Your business may have up to four SIC codes if it has complex activities or is doing different things at different locations. When assigning your VAT rate, we use one SIC code that summarises the main activity for your business as a whole.


I think I’m being incorrectly charged VAT on my water

If you think you’re being incorrectly charged, then the best thing to do is find your business’ main SIC code and let us know. Provide as much information as you can via our general enquiry form and we’ll get back to you.