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
For those businesses who do pay VAT, it's only charged for fresh water. There's no VAT on waste water.
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 any VAT.
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.
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 below and we’ll get back to you.