VAT Information
Many of our customers ask us if they should be paying VAT on their water charges
We have pulled together some useful information to help you determine whether you should or shouldn’t be paying VAT. Please refer to the help topics on this page and fill in the contact us form below if you have further questions on VAT or believe your current VAT treatment for water is incorrect.
To ensure we bill you correctly, it’s important that you let us know if you need your VAT charges amending. To do this, simply fill out the form below.
If you are unsure of your SIC code, please download our guide.
If you have further questions on VAT or believe your current VAT treatment for water is incorrect, please contact us.
Your questions answered:
What is a SIC code?
A Standard Industry Classification (SIC) code is used by the Office of National Statistics (ONS)to describe your company’s primary business activity. These codes help categorise businesses into specific industries for various regulatory and statistical purposes. The SIC codes are organised into Divisions, each further divided into classes and sub-classes.
For the water industry, the relevant VAT rules refer to the 1980 SIC code list. Although updated versions of the SIC list exist (from 1992, 1997, and 2007), the 1980 list remains the reference for VAT purposes. If your company files an annual return with Companies House , you’re required to report up to four SIC codes representing your business activities, with the primary code determining VAT obligations on water supplied.
If you run an unincorporated business and haven’t determined your primary SIC code before, you can use the 1980 SIC list and additional resources from the ONS to find the correct code.
What SIC code should I provide when opening a business account, and why is it important?
When opening a business account, we need your primary SIC code to determine if VAT should be applied to your water charges. VAT is mandatory if your main industrial activity falls within Divisions 1 to 5 of the 1980 SIC code list.
During account setup, you’ll be asked to declare your SIC code, confirming that your business’s primary activity is outside Divisions 1 to 5, enabling us to apply VAT zero-rating to your water bills. If we can’t determine your business’s activity from the provided information, we may need to contact you for further details. Without a suitable SIC code declaration, we will apply VAT to your water bill.
If you believe VAT Is being incorrectly charged (or not charged) based on your business activities, please contact us for help.
What is Relevant Industrial Activity?
Relevant Industrial Activities are those listed under Divisions 1 to 5 of the 1980 Standard Industrial Classification (SIC) list:
| Division | Title |
| 1 | Energy and water supply industries. |
| 2 | Extraction of minerals and ores other than fuels; manufacture of metal, mineral products and chemicals. |
| 3 | Metal goods, engineering and vehicle industries. |
| 4 | Other manufacturing industries. |
| 5 | Construction. |
These activities, including mining, quarrying, and various manufacturing and construction industries, must pay VAT on their water supply. If your business’s primary activity is classified under Divisions 0 or 6 to 9, you do not need to pay VAT on water.
For more detailed information, including a conversion table between 1980 and 2007 SIC codes, please refer to the HMRC VAT water and sewerage services manual.
Do I have to pay VAT on my water bill?
VAT is not charged on water supplied to domestic and non-industrial business customers, as these supplies are zero-rated. However, if your business is classified as engaging in a Relevant Industrial Activity, VAT must be added to your water bill.
Typically, the disposal and treatment of sewerage and wastewater are zero-rated for VAT. Therefore, VAT may only be applied to the water supply portion of your bill if you engage in a Relevant Industrial Activity.
What is VAT?
VAT (Value Added Tax) is a tax applied to the sale of goods and services in the UK. The standard VAT rate is currently 20%, though some goods and services are subject to reduced or zero rates or are exempt from VAT altogether.