Hidden energy tax breaks for UK holiday parks

Many UK holiday park owners are currently exposed to expensive Climate Charge Levy (CCL) charges on their energy bills and although HMRC allow owners to legitimately avoid the CCL of around half a penny per unit of electricity used, it is not common knowledge.

Typically, £8,501 is reclaimed on electricity bills by holiday parks with the annual average energy spend being £22,000, but it doesn’t stop there as this figure relates to electricity only. Bulk (tank) LPG supplies are often eligible for a claim and have a value of almost the same rate as electricity; just over half a penny per litre. However, this applies only to bulk tank supply and not to cylinders.

This means that if owners are paying a full rate of VAT on energy bills, they may well be exempt as a ‘mixed use’ business. In the case of caravan parks, static caravans, shower blocks and launderettes for the use of park visitors are classed as ‘domestic’ for VAT purposes. If these components comprise over 60 per cent of the site, 100 per cent energy supply can attract the lower 5 per cent VAT rate, meaning that the supply is exempt from CCL.

A simple CCL exemption form takes minutes to complete and post and claims can be made as far back as November 2007. It is important to note that claims can be time limited and it may be more difficult for a supplier to provide a refund by going back many years. Indeed, some suppliers are limiting backdated claims to a maximum of four years. Once park owners have been qualified for a CCL refund from a supplier, they will also be required to submit a PP10 (supporting analysis of energy use for the CCL) form to HMRC.

It is also worth noting that CCL was added to energy bills in order to encourage the up-take of green energy which is 100 per cent exempt from the levy. Therefore, reinvesting any CCL refund into green technologies could also be beneficial not just for park operators but also for the environment.

Long-term strategic planning is a key step to holiday rental businesses maximising performance and reaching their full potential. Milsted Langdon’s specialists will work with you to identify where you are now and where you want to be in the future, as well as defining your objectives and the actions you need to achieve them. We can help with issues including cash flow projections and forecasting to support proposals for funding for new developments and assist in raising finance. For more information, please contact us.

Posted in Caravans.