VAT on heating oil in the UK

Heating oil bought to heat your home normally carries VAT at the reduced rate of 5%, not the standard 20%. Business use is usually charged at 20%. When you compare quotes, check whether each price includes VAT, because a price without VAT looks about 5% cheaper than it really is.

HMRC treats a delivery of 2,300 litres or less as domestic automatically, so the supplier can charge 5% without asking how you use the oil. A larger delivery for your home can still qualify for 5%, but the supplier may ask you to confirm that it is for domestic use. A large order does not automatically mean 20% VAT.

Some Northern Ireland suppliers show prices with VAT included and some do not say. Tankful marks each published price as VAT included, VAT extra, or “Ask if VAT is included”. If a supplier has not said, ask before you agree the price.

To compare fairly, ask each supplier for the same number of litres and the final delivered total including VAT and any delivery or small-order charge. Divide each total by the litres to compare the price per litre. HMRC’s guidance on fuel and power (VAT Notice 701/19) sets out the rules in full.