You may have wondered if you’re eligible to organise a business energy contract if you are one of the many people who has started their business up from home. Our guide explains the criteria required to use a business energy tariff when working at home!
ARE SOLE TRADERS WORKING FROM HOME ELIGIBLE FOR A BUSINESS ENERGY TARIFF?
If you are a sole trader and you work from home, you may be eligible to organise a business energy contract. If you meet certain criteria, you will also qualify as a micro business which will allow you to receive more protection from suppliers than if you were a larger business.
WHAT MAKES ME A MICRO BUSINESS?
You are considered to be a micro business if you:
- Use less than 200,000 kWh of gas or 55,000 kWh of electricity per year
- Have fewer than 10 employees (or the full-time equivalent)
- Your annual turnover is under €2m
HOW IS A BUSINESS ENERGY CONTRACT DIFFERENT TO A DOMESTIC ENERGY CONTRACT?
Business energy tariffs usually contain cheaper unit rates – meaning you could pay less for your gas and electricity. However, businesses pay higher VAT (20%) and also pay CCLs which can increase your energy costs.
Business energy contracts are usually fixed in their contract lengths and gas and electricity rates. This means you will be able to budget for your business better as you can anticipate costs, but it also means that you will need to complete your gas or electricity contract if you do not want to incur any cancellation fees.
Once you’ve agreed on a gas or electricity tariff with a supplier, they will usually purchase the energy in bulk when your contract starts. If you decide you want to cancel your contract before the determined switching period, you may incur high fees.
If you don’t renew your contract, you’ll be moved into pricey Out-of-Contract rates so it is very important that you remember when your tariff is due to finish. By renewing, you can reduce the possibility of having to pay more for the same energy usage.
HOW AM I ELIGIBLE FOR BUSINESS ENERGY IN MY HOME?
To be eligible for switching from a domestic contract to business energy tariffs, you need to prove that you run a business from your home and that a large portion of the energy consumed is for business purposes – usually 50% of your energy usage. 50% may need high, but you can include your heating, lighting and electricity usage in this figure. Appliances that you would use regardless of your business operating at home do not come under this figure so household fridges, for example, will not be included in the business electricity usage.
WHAT PROTECTION DO MICRO BUSINESSES GET IN THEIR ENERGY CONTRACTS?
After a CMA investigation, micro-businesses now have regulations protecting them from brokers and suppliers attempting to advantage.
Energy companies are required to inform you when your end date and notice period are on all fixed-term contract bills. Micro businesses also benefit from a shorter notice period, now 30 days instead of 90 for most businesses.
Micro businesses can notify their current suppliers that they wish to switch energy contracts at any point in their contract. However, the official switch will not be completed until their current contract is completed. When it is time to renew your energy contract, suppliers must approach micro businesses and inform them of how much energy they have used throughout the contract, and what other deals are available to them for when they want to switch.
If you run your business from home, get in touch with us today. If you believe you are eligible, we can help you compare a range of business gas and electricity tariffs. Use our easy online comparison service to start comparing energy tariffs today!