Free heating oil tool · Updated 5 August 2026

What VAT Do You Pay on Heating Oil?

Domestic heating oil is charged VAT at the reduced rate of 5%. Deliveries of 2,300 litres or less get it automatically. Above that, home heating stays at 5% with a domestic-use declaration; only non-domestic use pays 20%. On 3,000 litres at 92.5p that is a £416.25 gap, surveyed on 5 August 2026.

Your order

Litres in one delivery3,000L

500L2,300L threshold5,000L

Price per litre (ex VAT)

Today's UK average, surveyed on 5 August 2026.

Use type

Your VAT rate

Applicable rate

on 3,000 litres, domestic use

Total for this order

£2,913.75

If all at 5%

£2,913.75

If all at 20%

£3,330.00

Domestic heating oil stays at 5% even above 2,300 litres, but the supplier will usually ask you to sign a domestic-use declaration for the qualifying quantity.

A worked example

Say you order 3,000 litres in one delivery to fill a large tank before winter. On 5 August 2026 the UK average was 92.5p per litre, so the cost before VAT is £2,775.00. Because 3,000 litres is above the 2,300 litre threshold, the use type now decides the rate.

If this is oil for a home, it is qualifying domestic use, so it stays at 5% and the total is £2,913.75. The supplier usually asks you to sign a short domestic-use declaration. If instead the oil is for a business, it is standard rated at 20%, giving £3,330.00, which is £416.25 more. So the same 3,000 litres can cost either figure depending only on how the fuel is used, not on the volume alone.

For mixed premises above the threshold, the 60% rule applies. If at least 60% is for qualifying use, the whole supply is 5%. Below that it is apportioned. At 40% qualifying, this order would be charged a blended 14.0%, a total of £3,163.50.

VAT and cost by order size and use

At today's average of 92.5p per litre. Domestic and charity non-business use stays at 5% at any volume; the commercial column shows what non-domestic use pays.

Litres in one delivery	Domestic rate	Domestic total	Commercial rate	Commercial total
500L	5%	£485.63	5%	£485.63
1,000L	5%	£971.25	5%	£971.25
2,000L	5%	£1,942.50	5%	£1,942.50
2,300L	5%	£2,233.88	5%	£2,233.88
3,000L	5%	£2,913.75	20%	£3,330.00
4,000L	5%	£3,885.00	20%	£4,440.00

Rows shaded amber are above the 2,300 litre threshold. Note that domestic home heating stays at 5% on every row: only non-domestic use moves to 20% above the threshold.

How this is calculated

domestic use:   rate = 0.05 (5%) at any volume
commercial use: rate = litres > 2300 ? 0.2 (20%) : 0.05 (5%)
mixed use > 2300L: qualifying_share >= 0.6 ? 5% whole supply
                     : apportion (share x 5% + rest x 20%)
total = litres x ppl / 100 x (1 + rate)

vat_domestic                    = 0.05  (5%,  verified 2026-07-28)
vat_standard                    = 0.2  (20%, verified 2026-07-28)
vat_threshold_litres            = 2300 litres per delivery (de minimis)
vat_mixed_qualifying_threshold  = 0.6 (60% rule, HMRC VAT Notice 701/19)

Worked (3000 L at 92.5p, 5 August 2026):
  ex_vat            = 3000 x 92.5 / 100 = £2,775.00
  domestic at 5%    = £2,913.75
  commercial at 20% = £3,330.00
  gap               = £416.25

Figures used on this page

Figure	Value	Source	Verified
vat domestic	0.05 ratio	VAT Act 1994 Schedule 7A Group 1, domestic fuel reduced rate	2026-07-28
vat standard	0.2 ratio	VAT Act 1994, standard rate	2026-07-28
vat threshold litres	2300 litres	HMRC VAT Notice 701/19, de minimis limit for domestic use presumption	2026-07-28
vat mixed qualifying threshold	0.6 ratio	HMRC VAT Notice 701/19: where 60% or more of a mixed-use supply is for qualifying use, the whole supply is reduced-rated; otherwise it is apportioned	2026-07-28

What affects the result

The size of a single delivery. The threshold is per delivery, not per year. Up to 2,300 litres in one drop is reduced-rated at 5% automatically, whatever the use. Above that, the use type decides the rate rather than the volume on its own.

Whether the use is domestic. Fuel for a home, or for a charity non-business activity, is qualifying use and stays at 5% at any volume. Fuel for a business, farm office or commercial premises is standard rated at 20% once the delivery is over the threshold.

Mixed use and the 60% rule. For premises with both domestic and non-domestic use above the threshold, if 60% or more of the fuel is for qualifying use the whole supply is reduced-rated. Below 60% it is apportioned, with the qualifying share at 5% and the rest at 20%.

This is general guidance, not tax advice. The rates, the 2,300 litre limit and the 60% rule come from HMRC VAT Notice 701/19. For an unusual situation, check with your supplier or an accountant before ordering.

VAT threshold checker FAQs

What VAT do you pay on heating oil?

Domestic heating oil is reduced-rated at 5%. Deliveries of 2,300 litres or less get 5% automatically. Larger deliveries for home heating also stay at 5%, usually with a domestic-use declaration. Only non-domestic use is standard-rated at 20% above the threshold.

What is the 2,300 litre VAT rule?

HMRC treats any delivery of 2,300 litres or less as domestic, so it is reduced-rated at 5% automatically, whatever the use. Above 2,300 litres the use matters: qualifying domestic or charity use is still 5%, other use is 20%.

Does a household pay 20% on a large order?

No. A home ordering more than 2,300 litres for heating still pays 5%. The supplier normally asks for a simple domestic-use declaration on the qualifying quantity. The 20% rate is for business or other non-qualifying use, not ordinary home heating.

How does mixed domestic and commercial use work?

For a supply above 2,300 litres, the 60% rule applies. If 60% or more is for qualifying use, the whole supply is 5%. If less, it is apportioned: the qualifying share at 5% and the rest at 20%. Below 2,300 litres it is always 5%.

How much is 20% instead of 5% on a big order?

On 3,000 litres at 92.5p per litre, non-domestic use at 20% costs £3,330.00 against £2,913.75 at the domestic 5% rate, a difference of £416.25. That gap is why confirming your use type matters on large orders.