Over the last few years, there has been a dramatic shift in the numbers of people working from home. During 2019, 1.7 million people in the UK reported working from home in some capacity. That number increased dramatically during 2020 due to the impact of the pandemic. In April 2020, research by the UK’s Office for National Statistics found that 46% of adults in employment reported working from home with a significant rise from pre-COVID levels.
The number of businesses registered in the UK has increased every year since 2000. As more people are choosing set-up their own businesses and operate as sole traders or develop into small to medium-sized businesses (SME), there has been an increasing demand for business space, with many opting to run their business from home.
But what does it mean for those businesses when it comes to energy? Many of these small businesses operating from home are on standard domestic contracts when they could be saving money on a more suited business energy contract.
Love Energy Savings provides dedicated business energy switch and commercial utility switch services, as well as specialised support and advice for tens of thousands of businesses every year. We want our customers to be as profitable and successful as possible.
We get a lot of enquiries on eligibility for commercial energy tariffs for home-based businesses, this guide answers the most commonly asked questions.
Am I eligible for a business energy contract if I work from home?
If you’re a sole trader, micro-business or SME, you may be eligible for a business energy contract. However, you will need to jump through some hoops. You will need to prove that you run your business from home and that a significant chunk of your energy (usually 50% or more) is used for business.
Qualifying energy use can be things like computers, phones, printers, lighting, heating and any other equipment you need for the day-to-day operation of your business. Appliances such as fridge-freezers etc do not count.
For sole traders, qualifying as a microbusiness can afford you extra benefits, such as a 30-day notice period on your business energy contract, versus 90 days for other businesses. You can read more about small energy business prices here.
Why get a business energy contract for your home?
Many business owners and employees working from home use their domestic energy contracts to power their home office. However, there's a major advantage to securing a business energy tariff, and that is cost.
The cheapest commercial energy contracts’ unit rates are usually much lower than residential customers. Equally, business energy contracts tend to be a fixed price for a certain period of time and with a set unit rate, allowing you to guarantee a cheaper unit price. These are major incentives but be mindful that there are also drawbacks.
Is a business energy contract a better deal for my business?
That is difficult to say, as it does depend on your specific location, business, energy usage and tariff prices. We are happy to talk through your individual business needs and give you advice on a commercial energy tariff.
While many businesses save money on a business energy tariff, there are some downsides you need to be aware of and consider carefully.
- Be aware that while unit rates are cheaper, business energy contracts for home workers also include VAT and Climate Change Levy costs.
- There’s a lack of flexibility in fixed-term contracts, so before committing, you need to be confident that you will commit for the contract duration. Exit fees for business energy contracts tend to be higher than domestic energy contracts.
- Finally, rollover tariffs - which are the most expensive tariffs many energy companies automatically switch you to at the end of a fixed-price contract - can be very costly. Switching business energy supplier with Love Energy Savings can help you to mitigate this drawback – our advisors will contact you before the end of your fixed term period to let you know and advise you of the cheapest available deal at that time.
If you think you may be eligible for business energy rates, compare commercial energy with Love Energy Savings, and we can advise you through the process with our free and impartial service.