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Analyse your costs

If there’s ever been a time to be smart with your accounting and cash flow, it’s now.

It is vital to keep as much cash as possible in your business and stay in control of your expenditure. You need to work out where you are spending too much money and identify the most profitable areas of business to focus on. 

Find the best energy deal

Prices are high across the board, but you might still be able to reduce the amount you are paying for gas and electricity. 

The commercial energy market is competitive and suppliers are typically keen to increase their customer base. Business premises tend to use more energy than domestic properties so reducing your bill can make a significant difference. 

There are many well-known price comparison websites available, where you can compare energy prices and hopefully find a better deal for your business.

You can also use an energy broker although they will charge a fee but will do the heavy lifting for you. 

Special rules mean it’s easier for micro businesses to switch energy suppliers compared to larger companies. Since 30th April 2015:

  • the maximum notice period for terminating a micro business contract has been reduced from 90 to 30 days.
  • suppliers must include the current prices, new prices and annual consumption on renewal letters for fixed-term contracts to make comparisons easier.
  • suppliers must take all reasonable steps to acknowledge termination notice within five working days of receipt.

A micro business is defined as a business that:

  • employs fewer than 10 employees (or their full time equivalent) and has an annual turnover or balance sheet no greater than €2 million, or           
  • uses no more than 100,000 kWh of electricity per year, or 
  • uses no more than 293,000 kWh of gas per year.

Energy efficiency measures 

Steps you can take to reduce energy at your business premises include:

  • switch to LED lightbulbs: They last longer than traditional lighting and can reduce your energy bill by 20-40%.
  • use eco mode: Switching appliances such as dishwashers and printers to eco mode will reduce your energy consumption.
  • turn off equipment at end of the day: Switching off computers and other office equipment when not in use will cut your use of energy. 
  • install smart meters: This will make your bills more accurate and allow you to monitor your energy use on a daily basis so you can take steps to fix any problems. 
  • minimise heat loss: Installing double glazing and insulation can reduce unnecessary heat loss.
  • energy audits: You should regularly review your energy consumption to identify where you can be more efficient. Many suppliers offer this as a free service. You can also conduct it yourself or with the help of an external expert.
  • staggering work hours and remote working: Allowing staff to come to work at different times can cut energy use as can running a hybrid model with staff working from home or elsewhere some of the time. 

Find more advice on reducing energy use in this guide by the Carbon Trust.

Tax reliefs

There are energy related tax reliefs that your business might qualify for. 

The Climate Change Levy (CCL) is a tax on business electricity and gas bills which was set up to encourage businesses to reduce their greenhouse gas emissions. 

If you run a small business that uses less than 145kWh of gas or 33kWh of electricity per day on average, you qualify for 5% reduced rate VAT and do not need to pay the CCL. If so, you need to complete and submit a VAT certificate to your energy supplier for each metered supply.

If your business switches to using electric vehicles, you can claim capital allowances and potentially unlock other tax benefits which reduces the amount of tax you pay.

Access energy efficient and sustainable schemes

There are various schemes offering grants and loans to help businesses become more energy efficient and sustainable. 

You can find funding using government websites for businesses in England, Scotland, Wales and Northern Ireland.

The government has allocated around £5 billion in funding to help UK businesses become greener and more efficient as part of the UK’s commitment to reach net zero carbon emissions by 2050. The latest information is here.

Many local councils provide finance schemes focused on green energy and making enhancements to business premises such as installing solar panels. Examples include green business grants from the West of England Combined Authority and the Coventry and Warwickshire Green Business Programme.

Here are links for local authority websites: England, Wales, Scotland and Northern Ireland

There is also a detailed list of regional and local funding here.

Some energy suppliers provide energy efficient schemes or grants for businesses. 

Increase your prices

You may want to increase the prices of your products or services to offset the impact of energy costs.

Raising your prices is never an easy decision, particularly at a time when your customers are also suffering as a result of the cost-of-living crisis. However, there are ways to do it successfully.

Steps include analysing your exact costs to work out by how much you need to raise your prices and segmenting customers to identify those who will be least sensitive to price increases.

You can also take actions such as adding extra value for customers to soften the blow of a price rise.

We have provided more detailed advice on raising your prices in this guide

How TaxAssist Accountants can help

TaxAssist Accountants can help you with the right advice to support your business. While our expertise covers tax, accounting, bookkeeping and payroll, we can also connect you with other providers we work with both locally and nationally.

Contact us to find out more about our services and to book a free video or face-to-face consultation.

Date published 7 Jun 2022 | Last updated 24 Jun 2022

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.


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