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UK business energy in 2026: what's actually different from domestic

Business energy isn’t a smaller version of the home market. The Ofgem price cap doesn’t apply to non-domestic customers, contracts run from one year to five (sometimes longer), and most of the levers that matter — deemed rates, out-of-contract pricing, broker disclosure, micro-business protections — sit in supplier terms and Ofgem rules rather than in headline news figures. Below is what we think is worth understanding before you compare.

Are you a "micro-business"? It changes your rights

Ofgem defines a micro-business as one that meets any of three thresholds: fewer than ten employees and turnover at or below €2 million; or annual electricity consumption under 100,000 kWh; or annual gas consumption under 293,000 kWh. The vast majority of UK SMEs sit inside at least one of these tests. If you do, suppliers are required to give you principal contract terms, can’t use evergreen auto-renewal clauses that lock you in beyond the original term, and must give you a 30-day window before contract end to object or notify a switch. Larger non-domestic customers don’t get those automatic protections; their leverage comes from their volume.

Out-of-contract and "deemed" rates — the silent overcharge

If a fixed contract ends without a new one in place, you move onto an out-of-contract rate (with the same supplier) or a deemed rate (if you’ve taken over a property where energy was already flowing). Both are typically 20–50% above the equivalent fixed deal because the supplier prices in churn risk. Ofgem’s 2024 non-domestic research found that 33% of UK businesses had switched in the previous twelve months and 53% of switchers cited price as the primary driver — the flip side is that two thirds didn’t switch, of whom many will have been quietly sitting on those above-market rates. The first action for most operators is to find out what rate they’re actually on; the second is to compare against current fixed offers.

Contract length: when does locking in 24 or 36 months make sense?

Wholesale gas and electricity prices have been more volatile post-2022 than at any point since the 2008 spike. A longer fixed contract gives bill predictability but locks in price-at-the-time-of-signing — a benefit if wholesale rises during the term, a cost if wholesale falls. Most operators we work with use a simple rule of thumb: take the shortest term that gets you to the price you want. If 12-month and 24-month deals are within a few percent on unit rate, the 12 is usually the right pick — it preserves the option to renegotiate. If the 24 is materially cheaper, the longer term often wins, particularly for businesses with fixed-rent service charges or contracts where you can’t pass cost rises to customers easily.

What sits on a business energy bill that isn’t on a domestic one

Two non-domestic-specific items are worth knowing because they’re each worth real money:

• Climate Change Levy (CCL). Most non-domestic users pay CCL on gas and electricity (currently 0.775p/kWh on electricity, 0.609p/kWh on gas, set by HMRC and updated each April). Charities, very small users, and businesses on certain Climate Change Agreements can qualify for reduction or exemption. If you think you might qualify, ask your supplier directly — the application is supplier-led but you have to trigger it.
• VAT at 20% by default, or 5% if you qualify. Domestic energy is 5% VAT automatically. Non-domestic defaults to 20%, but charities, qualifying very-low-use sites, and energy used for residential purposes (care homes, certain self-catering accommodation) can be billed at 5% with the right declaration. Backdated VAT refunds are sometimes available where the rate was wrongly applied.

Brokers and TPIs — what to ask before you sign

A large share of UK SME energy switches go through a Third Party Intermediary (TPI), commonly called an energy broker. Since Ofgem’s 2022 rule changes the broker market is more transparent than it was, but commission structures still vary widely. Three questions to ask any broker before you sign anything: (1) what commission is built into the unit rate they’re quoting, (2) which suppliers’ tariffs are inside their panel and which are outside, and (3) what happens at renewal — do they automatically run another comparison or do you have to remember to re-engage? An honest broker will give you straight answers; if a question is dodged, that’s itself useful information.

Energy efficiency: the second lever

Switching is the fastest saving. Cutting consumption is the bigger one over time. The interventions that consistently pay back inside two years for a typical UK SME are LED lighting (30–50% reduction in lighting kWh, payback usually 12–18 months), automatic controls on heating and cooling (often 10–20% reduction in HVAC load), and small operational fixes — closing fridges, fixing seal damage, scheduling defrost cycles, switching off display kit overnight. The Carbon Trust and DESNZ both publish sector-specific guides; if you have on-site cooking, refrigeration or compressed air, those guides usually identify another 5–15% of savings the energy bill alone won’t reveal.

Last reviewed: April 2026. Sources: Ofgem Non-Domestic Research Report 2024; HMRC CCL guidance; DESNZ energy efficiency guides; Carbon Trust SME programme materials. Full citations and partner relationships on our methodology page.