Is there energy bill support for businesses?

Eligible businesses have been able to access a discount on wholesale energy prices since April, but the government scheme is due to end in March next year.

Businesses can no longer access the price cap to the unit cost of gas and electricity.

As rising costs and bills continue to be a concern for small businesses, read on to find out what support you might be able to access, and whether an extension to this support is likely.

We’ll also cover:

• support for households
• how to reduce your business energy bills
• how to support your employees
• crisis support

What is the Energy Bill Discount Scheme?

The Energy Bill Discount Scheme for UK businesses came in April 2023 and is currently set to end on 31 March 2024.

Chancellor Jeremy Hunt announced this scheme as a replacement for the previous Energy Bill Relief Scheme.

The current scheme offers a discount on wholesale prices of gas and electricity, rather than a fixed price.

Businesses that rely on energy-intensive production methods, for example steel, glass, and ceramics, will get a larger discount than other industries.

How much is the discount?

The Treasury announced details of the new Energy Bills Discount Scheme on 9 January 2023. Bills are discounted by:

• up to £6.97 per megawatt hour (MWh) for gas bills
• up to £19.61 per MWh for electricity

Am I eligible?

The scheme is available to anyone on a non-domestic contract, including:

• businesses
• voluntary sector organisations like charities
• public sector organisations like schools, hospitals, and care homes

Your business should be:

• on a fixed price contract, agreed on or after 1 December 2021
• signing a new fixed price contract
• on deemed/out of contract or variable tariffs
• on flexible purchase or similar contracts

If none of these apply to your business, you may not be eligible.

How do I get the discount?

The discount will automatically be applied to your energy bill by your supplier.

Contact your energy supplier if you think the discount hasn't been applied correctly.

Will more support be announced?

The cost of living crisis is continuing to impact the nation’s self-employed – and the colder winter months will only increase the financial strain. When it comes to bills, 43 per cent of SMEs are spending between 21 and 60 per cent more on their monthly energy bill than last year.

The latest inflation figures remain high (6.7 per cent as of 18 October) and the Bank of England base interest rate is also high to try to combat this challenge.

The Chancellor could potentially use his Autumn Statement on 22 November to reveal an extension to the scheme. However, the government has been clear that it's focused on cutting inflation, so any further support might be unlikely.

'A concern for the British economy'

Alan Thomas, UK CEO at Simply Business, said: "The stoic spirit of small business owners is the backbone of the UK economy - their resilience is vital to the nation's recovery and growth. The fact that many SMEs across the UK are struggling so significantly is a serious cause for concern for the British economy and communities.

“Naturally, the impact on consumer purchasing behaviour is trickling through to the books of small business owners at a time when SMEs need our support the most. The reduced levels of cash flow and liquidity will only make things worse for many.

"Small businesses sit at the heart of our communities and are vital to our economy, and it is essential that we continue to support them in these times of financial uncertainty.”

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).

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

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 £1,834 from 1 October to 31 December 2023. This is a £142 decrease from the previous cap of £1,976

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 can I reduce my business energy 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.

How to support your employees through the cost of living crisis

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
• Cost of living resources for small businesses
• Managing mental health at work – guidance to support yours and your employees’ mental health
• StepChange – debt charity offering free, independant advice
• Turn2us – financial support charity

How-to guides and protecting your business

• How to budget
• How to negotiate with your energy supplier
• Resources to help you manage your mental health and wellbeing
• What is business insurance?

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.