Flip to the back page of your water invoice. Look for the line that says “VAT” or “Tax.” If it says “20%” next to the water charge, congratulations—you’re a standard-rated business.
If it says “0%” or “Exempt,” you might be in a special category. Don’t get too excited—this is rare for most commercial properties. I once spent an hour on hold with my supplier only to learn my bakery’s bill was correct. I felt both relieved and annoyed.
Pro tip: Check if your water is metered or unmetered. Unmetered supplies sometimes have different rates. But honestly, 99% of businesses are on a meter, so you’re probably paying 20% on every drop.
Why does the government do this? (A mini rant)
Here’s the ironic bit: they want to encourage water conservation for homes, so they make domestic water VAT-free. But for businesses, they treat it like any other taxable supply—like buying paperclips or printer toner.
You’d think they’d want bakeries to stay clean and open, right? But no, water tax is a convenient revenue stream. And since most businesses can reclaim VAT, it’s just a cash-flow shuffle. A really annoying shuffle.
MWSS: VAT to be scrapped in Maynilad, Manila Water bills starting Mar
That said, if you’re a sole trader earning below the VAT threshold (currently £85,000), you can’t reclaim it. That means water tax is a direct cost to you. Ouch.
