VAT, SIC codes and your water bill

Do I have to pay VAT on my water bill?

Here we explain all about business water VAT, what SIC codes are and what they mean for you, and how to change your SIC code and VAT if it’s wrong.

What is VAT?

VAT (Value Added Tax) is a tax put on most of the UK’s goods and services. It’s normally 20%, but some products and services have a reduced rate, nil rate or are completely exempt.

Do I have to pay VAT on my water bill?

There is VAT on clean water, but not wastewater. Whether you have to pay it depends on what industry your business is in.

It’s businesses in divisions 1-5 of the 1980 edition of the SIC code list that have to pay VAT on their water. So, that’s if your business is in:

• Chemicals
• Construction
• Engineering
• Manufacturing
• Mining
• Textiles
• Utilities

The activities in these divisions are referred to as 'relevant industrial activities' and any businesses that carry out these activities must pay VAT on their water. If you're not in this line of work and your business is in divisions 0,6,7,8, or 9 of the 1980 SIC code list, you don’t have to pay VAT on your water.

If you fall into one of the categories listed above and you’re wondering how much VAT is charged on your water bills, it’s the usual 20%.

What's the SIC code list and what's a SIC code?

The Standard Industry Classification (SIC)code list is what’s used by the Office of National Statistics to describe the main business activity of your company. In the water industry, the VAT rules say we have to refer to the 1980 edition.

The SIC code list has general numbered divisions of industry, and then codes for each individual type of business within those divisions. So, if you’re a hairdressing and beauty parlour your division is ‘9 Other Services’ and your SIC code is 982. Simple!

How many SIC codes does my company need?

In your official documents you can choose up to 4 SIC codes if your business is doing different things at different locations, or has complex activities. For our VAT purposes we just need one SIC code that summarises the main activity for your business as a whole.

How can I find my company's SIC code?

Not all businesses need to normally use a SIC code and you may not know what yours is. You need your SIC code if your business is required to file an Annual Return with Companies House. So for example, if you're a sole trader you might not have used one before.

We still need to know your SIC code though so we can get the VAT right on the bills we send you. Please use the 1980 edition SIC code list and our VAT form to let us know your SIC code.

How can I check I've got the right SIC code?

You can look through the full list of SIC codes to see all the different classifications and make sure you’re in the most accurate one.

Why am I paying VAT on my water bills? How can I change my SIC code, or make sure I'm paying the right amount of VAT?

We charge VAT on clean water if your business is carrying out an industrial activity classified in divisions 1-5 of the 1980 edition of the SIC code list. 

If we don’t have your SIC code, and don't know what your business does we have to include VAT on all bills until we receive confirmation, so it’s a good idea to check the list and find out what code you think your business has.

To let us know or to update your SIC code details complete our VAT form and send it to us at:

Water Plus Correspondence
PO Box 12460
Harlow
CM20 9PJ

Still don't understand VAT and your water bill?

If you’re still struggling to understand SIC codes and whether or not you should be paying VAT on your water bill, get in touch and we’ll be happy to help.