How much VAT is on heating oil?

The 5% rate for homes

VAT is charged at 5% on heating oil for domestic and residential use, and on heating oil a charity uses for its non-business activities. That covers kerosene, gas oil and fuel oil burned for heat, as long as the oil carries the rebated rate of duty that heating fuels normally have.

Residential use is wider than houses and flats. HMRC's list includes caravans, houseboats, self-catering holiday accommodation, care homes, children's homes, hospices and student halls, plus outbuildings such as a garage used with the house. Hotels, inns, hospitals and prisons do not count as residential for this purpose.

The 2,300 litre rule

Any single supply of 2,300 litres or less of kerosene, gas oil or fuel oil is charged at 5% whatever it is used for, so a shop, office or farm heating with kerosene pays 5% on a small delivery too. HMRC calls this the de minimis limit, and the supplier needs no certificate to apply it.

HMRC usually treats everything delivered to one site on one day as one supply, even if there are separate invoices. Fill two tanks on the same site on the same day and the litres are added together. Deliveries on different days, or to different sites, normally count separately. Different grades of kerosene are not split to get under the limit, and if a group of farmers share a tank, each farmer's separately invoiced share counts as its own supply.

When 20% applies

Above 2,300 litres, heating oil for business use is charged at the standard rate of 20%. Where premises are partly domestic or charitable and partly business, HMRC's 60% rule decides the rate:

• If 60% or more of the oil is for qualifying use (domestic, or charity non-business), the whole delivery is charged at 5%.
• If less than 60% is for qualifying use, that share is charged at 5% and the rest at 20%.

For mixed use the supplier should get a certificate from the customer stating the exact percentage of qualifying use, with a separate certificate for each set of premises. Anyone giving an incorrect certificate can face a penalty. Road fuels such as derv and white diesel are always standard-rated, and so is kerosene that has not had its duty rebated.

The electricity VAT cut does not cover heating oil

From 1 October 2026 to 31 March 2027 the government has applied a temporary 0% rate of VAT to domestic electricity in Great Britain. HMRC says other fuel types are not affected, so heating oil for homes stays at 5% everywhere in the UK. In Northern Ireland, domestic electricity also stays at 5%.

Checking the VAT on a quote

Prices per litre are often quoted before VAT, so check which figure you are looking at. Fueltool's typical price for 1,000 litres today is 114.1p a litre ex VAT, which is 119.8p with 5% VAT added. To add 5% yourself, multiply the ex-VAT price by 1.05; for a business delivery charged at 20%, multiply by 1.2.

If your business is VAT-registered, ask your accountant whether you can reclaim the VAT on oil used for the business. Fueltool prices include delivery and totals are shown with 5% VAT, so you can compare prices for your postcode like for like.