Care home energy suppliers, tariffs and costs

Care homes in the UK are unique in their energy needs, often operating round the clock to ensure the safety and comfort of their residents. Managing energy consumption is crucial for these facilities, as it directly impacts operational costs and the quality of care provided. Energy usage in care homes is typically higher due to the need for heating, lighting, and powering medical equipment. This necessitates a careful consideration of energy tariffs and suppliers to ensure that the facility remains cost-effective while maintaining the highest standards of care. Understanding the specific energy requirements and how different factors affect these can help care homes make informed decisions when comparing energy options.

How much does energy cost for a care home?

There is no published price list for care homes. What a care home pays depends on how much it uses in a year, when it agreed its contract and for how long, wholesale prices at that time, the standing charge, meter type, payment method and credit history. The most recent government figures, for the second quarter of 2026 (April to June, provisional), put the average price paid by UK non-domestic customers at 24.51p per kWh for electricity and 5.28p per kWh for gas, including the Climate Change Levy and standing charges and excluding VAT. A year earlier the averages were 24.03p and 5.31p. Smaller users typically pay more per unit: businesses using under 20,000 kWh of electricity a year averaged 38.36p per kWh, and those using under 278,000 kWh of gas averaged 9.31p per kWh.

Source: Department for Energy Security and Net Zero, Prices of fuels purchased by non-domestic consumers in the UK (Quarterly Energy Prices tables 3.4.1 and 3.4.2), published 29 September 2026. Q2 2026 figures are provisional; next update 17 December 2026. Prices are fully delivered averages including the Climate Change Levy and all other elements except VAT, so standing charges are already spread across the units. Averages across every UK business in a band, not quotes, and not comparable with a supplier’s unit rate.

Do care homes pay 5% VAT on energy?

For gas, usually yes. For electricity the rate is 0% until 31 March 2027 and 5% again from 1 April 2027 (Northern Ireland stays at 5%). HMRC treats fuel and power supplied to “homes providing care for the elderly or disabled, people with a past or present dependence on alcohol or drugs or people with a past or present mental disorder” as domestic use. Domestic use is charged at the reduced rate of VAT (normally 5%) rather than the 20% standard rate, and the Climate Change Levy does not apply to it. If part of the building is used for something that does not qualify, the 60% rule decides the treatment: where 60% or more of the energy is for the residential care use, the whole supply gets the reduced rate; below that, the supply is split between the reduced rate and 20%. Suppliers generally need a signed VAT declaration certificate from you, stating the qualifying percentage for each premises, before they apply the reduced rate to a business account, so check the VAT line on your bill and ask for the certificate if you are being charged 20%. When you compare quotes shown excluding VAT, the difference between the reduced rate and 20% matters for the like-for-like figure. Source: HMRC VAT Notice 701/19, sections 2.8 and 3.2 to 3.5 (updated 5 February 2025), and HMRC Revenue and Customs Brief 10 (2026), which keeps the qualifying rules and certificate process unchanged.

Working out a monthly figure for your business

Take the annual kWh from your latest bill or annual statement, find the band above and multiply for a rough benchmark. A site using 15,000 kWh of electricity a year sits in the very small band: 15,000 × 38.36p is about £5,750 a year, or roughly £480 a month before VAT. A site using 60,000 kWh of gas a year: 60,000 × 9.31p is about £5,590 a year, or roughly £465 a month. The bands are statistical groupings used by the government, not supplier price breaks, so treat them as a guide to what similar-sized sites paid rather than a price you will be offered. To judge an actual quote, compare its total annual cost (unit rate × your annual kWh, plus the daily standing charge × 365) with what you pay now.

VAT and the Climate Change Levy on business energy

The prices above exclude VAT. Business energy normally carries VAT at 20% plus the Climate Change Levy (CCL). HMRC applies the 5% reduced rate, with no CCL, in three cases. First, low usage: supplies averaging no more than 33 kWh of electricity a day (1,000 kWh a month) or 145 kWh of gas a day (4,397 kWh a month) are treated as domestic use whoever the customer is. Second, fuel and power for domestic use, which HMRC defines to include homes providing care for the elderly or disabled, children’s homes, hospices and school or university residential accommodation. Third, a charity’s non-business activities. From 1 October 2026 to 31 March 2027, electricity that qualifies for the reduced rate is charged at 0% VAT instead of 5% in England, Scotland and Wales; qualifying gas stays at 5%, qualifying electricity in Northern Ireland stays at 5%, and electricity returns to 5% from 1 April 2027. HMRC has not changed which supplies qualify or the certificate process; the same rules decide whether a supply gets 0% or 20%. Where a site is mixed, 60% or more qualifying use means the whole supply gets the reduced rate; below that the supply is split between the two rates, and the customer gives the supplier a certificate declaring the qualifying percentage. Source: HMRC VAT Notice 701/19 (sections 2.8, 3.2 to 3.5, 4.2 and 5.2, updated 5 February 2025), gov.uk VAT rates and HMRC Revenue and Customs Brief 10 (2026).

Do Ofgem’s microbusiness protections apply to care homes?

Ofgem treats a business as a microbusiness if it has fewer than 10 employees (or their full-time equivalent) and an annual turnover or balance sheet total of no more than £2 million, or if it uses no more than 100,000 kWh of electricity or 293,000 kWh of gas a year. A business can be a microbusiness for one fuel and not the other. Independent care homes that meet either test are covered by Ofgem’s microbusiness rules, which give extra protections around contract terms and renewals (Ofgem: get energy for your business).

Do business energy rates vary by region?

Yes. Part of every unit rate covers the cost of the local electricity distribution network, and Great Britain has 14 licensed distribution areas each with its own charges, so identical contracts are priced differently in, for example, the north of Scotland and London. DESNZ does not publish non-domestic prices by region, so regional figures quoted elsewhere are supplier or broker estimates rather than official statistics.

Which energy supplier is best for care homes?

There is no single answer. Suppliers price business contracts individually rather than publishing standard tariffs for care homes, so the cheapest supplier for one business is often not the cheapest for the next: each prices on the consumption, meter type, contract length and credit profile in front of it. Compare the total annual cost of like-for-like contract lengths rather than the headline unit rate, and check the standing charge and what happens when the contract ends before signing.

How care homes use energy

Care homes often exhibit a high and consistent level of energy usage due to their 24-hour operation requirements. The need for constant heating, especially during colder months, alongside the demand for hot water and lighting, contribute significantly to the overall energy consumption. Additionally, care homes rely on various medical and mobility equipment that must be powered continuously to ensure resident safety and care. Understanding these patterns can help in negotiating better energy rates and implementing energy-efficient practices.

What affects energy bills for care homes

Several factors influence the energy bills of care homes, including:

• The size of the facility and the number of residents.
• Energy efficiency of the building, including insulation and windows.
• Usage patterns and peak times for energy consumption.
• The type and efficiency of appliances and medical equipment used.
• Seasonal variations impacting heating and cooling needs.

How to compare tariffs

When comparing energy tariffs for a care home, consider the following checklist:

• Assess the current energy usage to understand needs.
• Compare fixed and variable tariffs on total cost.
• Evaluate the length of contract terms and flexibility.
• Check if green energy options are available and feasible.
• Look for suppliers offering tailored business support services.

Gas or electricity: what matters most

For care homes, both gas and electricity play crucial roles. Gas is often used for heating and hot water, while electricity powers lighting and essential medical equipment. The balance between gas and electricity usage may vary, but both are integral to operational efficiency and resident comfort. Care homes should evaluate their specific requirements to determine the most cost-effective mix of energy sources.

How switching works

The process of switching energy suppliers for a care home generally involves the following steps:

1. Review the current energy contract terms and expiration date.
2. Conduct a comprehensive comparison of different suppliers and tariffs.
3. Select the most suitable energy plan based on cost and service needs.
4. Notify the current supplier of the switch, adhering to any notice periods.
5. Coordinate with the new supplier to ensure a seamless transition without service interruption.

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