Energy bill support for small businesses comes to an end – what now?
8-minute read
Energy bill support for small businesses has now ended and many are facing an uncertain time ahead when it comes to high bills and taxes.
The government’s Energy Bill Discount Scheme ended on 31 March, leaving many businesses wondering how they’ll be able to survive.
With the rising cost of doing business still a very real concern for small businesses, keep reading to find out if any other support is available. We also look into whether you should lock in a new energy supplier and how energy efficiency investments could save you money.
Here's what we'll be covering:
Energy Bill Discount Scheme ends
The Energy Bill Discount Scheme for UK businesses started in April 2023 and ended on 31 March 2024.
Eligible businesses had been able to access a discount on wholesale energy prices through the scheme. Businesses had previously been able to access a price cap to the unit cost of gas and electricity, but this ended when the discount scheme was introduced in 2023.
Businesses that rely on energy-intensive production methods, for example steel, glass, and ceramics, were able to access a larger discount than other industries.
Will more support be announced?
We know over a quarter of small businesses are spending up to 40 per cent more on energy each month than in the previous year.
Many businesses had hoped more support would be announced in the Spring Budget, but instead Chancellor Jeremy Hunt revealed measures like raising the VAT threshold and a reduction in National Insurance.
'A crippling set of circumstances'
Alan Thomas, UK CEO at Simply Business, wrote to the chancellor ahead of the Spring Budget: "Small businesses are undeniably the backbone of both our communities and economy. Yet the self-employed are currently facing a crippling set of circumstances that have left them squeezed from both sides – with costs spiralling at a time when their customers are becoming increasingly price conscious.
“The issues that are plaguing the SME community and impeding growth – from soaring interest rates and late payments, to eye-watering energy costs and the heavy hand of business rates – are not only taking their toll professionally, but also on people’s emotional and mental wellbeing.
“We’re calling on the government to invest in the future of millions of British small businesses. Create the conditions for SMEs to thrive, and we will all feel the benefit.”
Businesses are making sacrifices
Micky Whiteman, owner of RD1 Clothing said the energy relief scheme had been helpful but bills are just one challenge among many for small businesses.
"Our electric bill has been manageable, but this is just one factor businesses are struggling with. The cost of living crisis is impacting consumer spending (they have higher energy bills too) and suppliers are increasing their prices."
He added: "I think there will be fewer businesses looking to start up and some may not survive if the government cannot continue to support or bring it down further."
Micky also told us that the economic environment means he needs to "make some sacrifices". He's managed to keep the cost of products down in the shop so far but has had to reduce the number of staff he employs.
What if I run my business from home?
If you run your business from home then it’s unlikely that you’ll have a business energy account. This is only possible if you use 50 per cent or more of your energy to run your business at home.
However home-based businesses won’t pay more than the energy price cap set by Ofgem (more on this below).
Should I fix my energy deal?
Energy prices have been unpredictable for the last couple of years and the volatile macroeconomic climate continues to make it difficult to know what will happen to wholesale prices in 2024.
But we’re starting to see more fixed tariffs available. And the price cap for domestic customers is much lower than it was 12 months ago, so it could be a good time to shop around if your contract is coming to an end.
You can sometimes make savings by fixing your energy deal with a supplier. This means you’ll agree to pay a certain rate for the period of the contract. However, make sure you do your research to be sure you’re getting a competitive rate.
If you’re interested to know what the average energy consumption is for UK businesses, check out the latest energy statistics from Uswitch.
Read our guide to the best energy suppliers and the types of energy contracts for more information.
Energy saving tips – how to reduce your bills
Shopping around for a new deal, making your business more energy efficient, and measuring how much you’re using could help you reduce your energy bills.
Look for a new energy deal
Many businesses may be looking to renew their tariff or shop around for a new energy deal. However you’ll only be able to do this if your existing contract is coming to an end, or you’re not tied into a contract.
- contact your energy supplier – ask your supplier if they can offer you a better deal
- use comparison websites – research suppliers and rates for a new business energy tariff
- check when your contract ends – look at how much notice you need to give your supplier if you want to switch
Improve energy efficiency
There may be things you can do to make your business more energy efficient. These don’t all have to be expensive changes, and you could look into funding to help your business become greener.
For example, you could replace lights with LED bulbs or install sensors that dim lights in bright spaces. And make sure you turn off any lights and machinery you’re able to at the end of each day.
Understand your energy usage
If you haven’t already, consider installing a smart meter for your business. This can help you understand how you’re using your energy, and avoid paying estimated bills. This means you’ll only pay for what you actually use.
It’s worth noting too, energy suppliers can’t charge you for energy used more than 12 months ago if you’re a ‘microbusiness’. Ofgem has more information on back-billing rules.
Setting sustainability goals
We know that rising costs are putting many small businesses off track when it comes to their sustainability goals, but there are affordable ways to start this process.
Small changes like reducing waste and choosing sustainable packaging can save you money as well as having a positive impact on the environment. And with many consumers seeking out businesses that are mindful of their impact, doing so honestly and authentically can help you attract more customers.
While it can be daunting and difficult to know where to start when it comes to making your business more sustainable, it’s possible to set manageable goals for incremental change.
Social Impact Manager at Simply Business, Natalie Rathner says: If setting goals for positive impact seems too far out of reach for now, start by aiming for your impact to be neutral. Start with the goal to 'do no harm' – with this philosophy you can set goals for improvement.”
What’s more, the government’s commitment to reach net zero by 2050 means all businesses are going to be increasingly scrutinised in this area. You can find out more and pledge your support on the SME Climate Hub.
For more tips on making your business more sustainable, read these expert tips from Love Energy Savings. And bigger businesses might be considering how to implement an Environmental, Social, and Governance strategy.
What if I can’t pay my business energy bill?
The best thing to do if you’re worried about paying your energy bill is to contact your supplier to arrange an energy payment plan. They may be able to help by giving you more time to pay or offering you a break or reduction in payments. You may also be able to ask for access to hardship funds.
Citizens Advice has a consumer helpline you can call if you’re in debt or if you’ve got a bill you can’t afford and your supplier hasn’t offered you a payment plan.
Don’t let financial problems build up or ignore them. The Business Debtline is a charity that can provide free debt advice to small businesses in England, Wales, and Scotland. You can speak to one of their advisers over the phone or use their live web chat service.
It’s also important to remember that not paying your bills can impact your credit score.
Visit Ofgem’s energy advice page for more information.
If you're looking for more support on how to manage your business finances, visit our cost of living hub for small businesses and the self-employed.
Support for households and consumers
There's a cap on how much energy suppliers can charge consumers for gas and electricity, which is reviewed every three months. This means there’s a limit to the standing charges and unit rates for people on a default tariff (so it's a cap on units rather than what you pay).
The energy price cap for domestic consumers is £1,690 from 1 April to 31 June 2024. This is a £238 decrease from the previous cap of £1,928.
Energy bills discount for consumers
A scheme giving domestic consumers a discount on their energy bills ended on 31 March 2023.
The Energy Bills Support Scheme was open to eligible households in Great Britain, offering a £400 discount on gas and electricity.
This scheme ran from October 2022 to March 2023 and the discount was applied automatically to your energy bill.
How to support your employees
If you employ people in your business then looking after their wellbeing at work is going to be top of mind, particularly while navigating times of financial uncertainty.
A salary advance can be helpful as an infrequent way to give staff access to their salary early, but shouldn’t be relied on as a bridge between paycheques.
The bottom line is to make sure you’re paying your staff fairly for the work they’re doing. Offering rewards or local discounts, however small, can also help your people save money and feel valued.
The CIPD has a range of resources to help employers support employees struggling with the cost of living.
Finally, always signpost your staff to resources such as Citizens Advice or The Money Charity if you’re worried they’re getting into debt.
Crisis support – what to do if you can't pay staff or suppliers
If your business’s financial situation has reached a point where you’re worried you won’t be able to pay your staff or suppliers then you should get financial advice immediately.
You might be able to apply for the government’s breathing space scheme if you're in England or Wales (although this doesn’t apply for limited companies).
If you’ve caught the situation early, consider if there are other things you can do in the short-term. Can you reduce costs in other areas to make sure you can cover staff wages and bills? Take a look at your cashflow and chase up unpaid invoices in the first instance.
Useful resources and organisations
- Business Debtline – free debt advice
- Citizens Advice – guidance if you're struggling to pay your business energy bill
- Managing mental health at work – guidance to support yours and your employees' mental health
- StepChange – debt charity offering free, independent advice
- Turn2Us – financial support charity
How-to guides and protecting your business
How are rising costs affecting your business? Let us know in the comments.
This article is intended as a guide and should not be used as a substitute for professional financial advice.
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Written by
Catriona Smith
Catriona Smith is a content and marketing professional with 12 years’ experience across the financial services, higher education, and insurance sectors. She’s also a trained NCTJ Gold Standard journalist. As a Senior Copywriter at Simply Business, Catriona has in-depth knowledge of small business concerns and specialises in tax, marketing, and business operations. Catriona lives in the seaside city of Brighton where she’s also a freelance yoga teacher.
We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
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