Question 1

How does the Ofgem energy price cap work?

Accepted Answer

The energy price cap, set by the regulator Ofgem, limits the maximum unit rates and standing charges suppliers can charge most domestic customers on standard variable tariffs. It is reviewed quarterly and reflects wholesale costs. The headline figure describes a typical household’s annual bill, but your actual cost depends on how much energy you use. Fixed deals can sit above or below the cap.

Question 2

What VAT applies to energy bills?

Accepted Answer

Domestic gas and electricity are charged a reduced VAT rate of 5%. Most business energy is standard-rated at 20%, though small businesses using very low quantities, or premises with a qualifying charitable or domestic use, may qualify for the 5% rate on part or all of their supply. Energy-saving materials installed in homes have also benefited from temporary VAT relief.

Question 3

Can renewable-energy firms claim R&D tax credits?

Accepted Answer

Yes, where they resolve genuine scientific or technological uncertainty — for example in storage, grid integration, turbine design or efficiency. From April 2024 the SME and RDEC schemes merged into a single above-the-line credit for most claimants, with extra support for R&D-intensive loss-making SMEs. Claims now require detailed additional information and, in some cases, advance notification, so keep strong technical and cost records.

Question 4

Does IR35 affect oil, gas and renewables contractors?

Accepted Answer

Frequently. Specialist engineers and project staff working through their own limited companies for medium or large clients have their IR35 status assessed by the client. Inside IR35 means PAYE-style taxation, removing most company efficiencies; outside allows a salary-and-dividend mix. IR35 has long been a live issue offshore in oil and gas and increasingly in renewables. Genuine independence and proper contracts support an outside position.

Question 5

How can I reduce my home energy bills?

Accepted Answer

Cut usage with insulation, draught-proofing, a smart thermostat and efficient appliances, and compare tariffs when fixed deals beat the price cap. Heat pumps and solar can lower long-term costs, sometimes with grant support such as the Boiler Upgrade Scheme. Reading your meter and using our energy-bill and electricity-cost calculators helps you see where the money goes and which changes pay back fastest.

Question 6

What capital allowances can energy companies claim?

Accepted Answer

Energy firms investing in plant and machinery — generation equipment, grid assets, EV charging and similar — can usually claim capital allowances. The Annual Investment Allowance gives full relief up to £1m, and full expensing lets companies write off qualifying new plant in the year of purchase. Some assets attract first-year allowances. These reliefs are vital for capital-intensive projects, materially reducing taxable profit.

Question 7

How is corporation tax calculated for an energy company?

Accepted Answer

Corporation tax is charged on company profits at 19% where profits are £50,000 or below and 25% above £250,000, with marginal relief tapering between. R&D relief, capital allowances and pension contributions reduce taxable profit. Parts of the sector also face additional, windfall-style levies on certain profits. Returns are filed within 12 months of the accounting period end, with tax due nine months and a day after.

Question 8

How do I work out the cost of charging an electric car at home?

Accepted Answer

Multiply your charger’s electricity used (the battery capacity added, in kWh) by your electricity unit rate in pence per kWh. Charging overnight on a cheaper off-peak EV tariff can cut the cost substantially compared with the day rate or public chargers. Our electricity-cost and electric-car-savings calculators estimate charging costs and compare running an EV against a petrol or diesel equivalent.

Question 9

Do energy-sector contractors take salary or dividends?

Accepted Answer

A contractor working outside IR35 through their own company typically takes a modest salary up to a tax-efficient threshold, then dividends from after-tax profits, which carry rates of 8.75%, 33.75% and 39.35% and no National Insurance. Employer pension contributions from the company are another efficient route. Inside IR35, most of this advantage disappears. Our dividend-versus-salary and contractor calculators model the best mix.

Question 10

Is switching to an electric vehicle worth it for energy work?

Accepted Answer

Electric cars and vans cost more upfront but have much lower running and maintenance costs, plus favourable company-car benefit-in-kind rates and capital allowances. Savings depend on mileage, your electricity versus fuel prices, and charging access — home off-peak charging is far cheaper than public rapid chargers. Our electric-car-savings calculator compares lifetime costs so you can judge whether the switch pays off for your driving.

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