Household benefits and vat

Hi,

so far, all those persons to whom I've addressed this question, don't seem to have come across the issue before so I'm hoping that someone on this forum might have done so and can help.

The subject concerns the Electricity Allowance and VAT.

If you're an ESB customer the Electricity Allowance is incuded in and deducted from your bill. The important point here is that ESB only charges VAT on the NET sum i.e the amount chargeable after deducting the Electricity Allowance.

If your supplier is other than ESB you receive a monthly payment into your bank account from the Dept of Social Protection. However, the (non-ESB) supplier charges VAT on the FULL amount of your bill, effectively ignoring the Electrcity Allowance.

So the question is, how does one obtain repayment of the VAT deducted by suppliers other than ESB?

Bord Gais say it's matter for Revenue; Revenue say it's a matter for Dept for Social Protection; Social Protection haven't replied to my emails yet.....

Before I go to the TD,has anybody come across/raised this matter before? As things stand, it seems to me that there is an inconsistency between the treatment of those who are with ESB and those who aren't.

You could do a spot check and see if other (non esb) suppliers charge vat on the Gr sum and if not then throw that at the company concerned....who are..name n shame...

How much does the Dept of Social Protection pay per month for non-esb customers?
I know it's 400 units per bill with the ESB, but they pay monthly don't they with other providers? So how much is 200 units worth according to the Dept?

I don't think this is an issue, unless you have worked out from your bill that your allowance does not include the free units plus VAT. i know that the Telephone Allowance Payment for people not with Eircom is €26.00 per month, which is €21.40 plus €4.60 VAT.

400 units for ESB is €60.24. (not including VAT or Standing Charge, so basically if you are getting more than that from DFSA the VAT is being allowed for.

That's what i'm thinking too, although looking through my bill 400 units is actually €56.40 (not including VAT or standing charge) not €60.24.

I'm on the Nightsaver tariff, so possibly that would account for the difference?

Day Units are €0.1506 -> 400 x 0.1506 = €60.24 or

Night Units are €0.0745 -> 400 x 0.0745 = €29.80

Hi everybody

Have read your posts with interest and can tell you that, as a question of fact, whether you receive the allowance directly as a deduction from your bill (if you're an ESB customer) or as a monthly cash payment into your bank a/c (non- ESB customers) you will get exactly the same amount over a 12 month period i.e. €488 (give or take a few cents).

If you are an ESB customer you get a credit on your bill which covers 400 units of electricity (i.e. 200 units per month) plus the standing charge (SC).

If you are a non-ESB customer you get a monthly payment into your bank a/c of €40.70, which equates to €488 over the year.

I have just checked a random 12 month period of bills from ESB and the total allowance which I received was €488 over that 12 months. The amounts on each 2-monthly bill varied between €87.44 (400 units €65.60 + SC €21.84) and €78.02 (400 units €58.20 m+ SC €19.82) but in total over the 12 months I received €488.

Following enquiries with DFSA, I was advised that the amounts granted in ESB bills can vary but the total yearly amount will still equal €488 (which my random check proves is indeed the case).

The allowance does NOT include VAT.

If you are an ESB customer, ESB gives you a credit for the VAT charged on that part of your bill which is covered by the Electricity Allowance.

If you are a non-ESB customer, you are charged VAT on the FULL amount of the bill, including what would be covered by the Electricity Allowance. This is because the Dept of Social & Family Affairs (DSFA) cannot give you the allowance directly in your bill (isn't it about time they got up to speed on this? Come on, there is now more than one power supplier!! This is the 21st Century for goodness sake !!!!!). This is why there is this apparent inequity between ESB and non-ESB customers, as far as VAT is concerned. No-one at DSFA seems to have thought this through.

Members may be interested to know that I have now referred this matter to Eamon O'Cuiv TD,Minister at DFSA (neither Bord Gais nor Revenue were able to give me a definitive answer). I received a holding letter from him 23 June saying "it was receiving attention". If I have not received a definitive response by 23 July I shall issue a reminding email.

I shall keep you informed of progress.

Hi Firebrand,

Thanks for the info, though i am interested in the fact that the Dept of Social Protection claim that "the total yearly amount will still equal €488"
How can they claim this when you pay more in standing charges than i do? My standing charges vary over a 12 month period from €14.36 to €17.14, the daily rate being 0.2520 for profile 1, urban 24 hour tariff.

Hi Chasm,

you're entirely welcome. Can't explain why your SC's should be different to mine (different tarriffs perhaps?) but have you tried doing what I did, i.e. actually checking your bills over a full 12 month period (if you haven't retained 12 months' worth your provider ought to be able to email you copies if you provide the dates you want; that's what I did with ESB and they were very helpful)? The allowance over that period should still work out in total to €488.
The only explanation I can offer is that which the DFSA gave to me, which is that the allowance is given in varying amounts over the year but that it still totals an annual sum of €488.

Hope that helps.

I have about 4 years worth of esb statements/bills here and actually looked over a 12 month period after reading your previous post but it does not add up to that amount.

Standing charges are different depending on whether you are urban or rural, so i do not understand how the Dept can claim that it pays the same amount.

A customer on urban 24 is charged a different amount for standing charges to a customer on rural 24, so the total yearly bills will not equal the same amount.

Hi Chasm,

in that case I would definitely write to DFSA and provide them wkith copies of the latest 12 months' bills and ask them to explain! Good Luck and let us know what happens!!

Hi Firebrand,

Have had a look through the BG site, and i think i may have worked out how the Dpt have done their sums
SC = Urban 24 hour €104.40 per Annum(according to BG website)
400 Units = €64.00 (inc VAT),
2400 Units per Annum = €384.00(inc VAT)

€104.40 + €384.00 = €488.40

By Those sums they have given you an allowance for 400 units per bill PLUS VAT.
One thing worth taking into consideration is that according to the BG website there are a number of different SC Tarriffs, of which i have quoted the cheapest, so if your SC charges are higher then you are not receiving enough to cover it. It seems to me that it is the SC that is the issue, not VAT.

I am happy enough with my allowance as, even though it does not add up to the €488 quoted, i do still receive my full entitlement.

The various SC quoted on the BG site are:
Standing Charges

Standing charges are not discounted and are charged at the same rate as ESB standing charges.
Standing charges per annum are as follows:

• Urban 24 hour €104.40
• Urban Nightsaver €143.34
• Rural 24 hour €139.20
• Rural Nightsaver €181.45
• Night storage €9.11

Hi Chasm,

apologies for the delay in replying - have been in the UK.
Can't quite follow your figures (it's probably me being a little slow). Are you with BG or ESB? One of my ESB bills showed the following:

Total Unit charge (836 units) = €118.33
SC (65 days@€0.3360/DAY) = €21.84
Sub TOTAL = €140.17
Minus PSO Levy Credit = €1.91 (cr)
Net Total Charge = €138.26

VAT (13.5%) on €138.26 = €18.67
Free Allowance Units 400 €56.62 (Cr)
Free Allowance SC €21.84 (Cr)
VAT on Free Allowance €78.46=€10.59 (This is a credit given by ESB and, as the figures below demonstrate, is not included in the free allowance which comes from the DFSA).

The actual Electrcity Allowance (2400 units + SC over the 12 month period 27/11/08 to 26/11/09) was:

27/11/08-26/1/09 = Units 64.61 +SC 20.50 = 85.11
27/01/09- 01/04/09 =Units 65.60+SC 21.84=87.44
02/04/09-26/05/05 = Units 62.10+SC 18.48=80.58
27/05/09-25/07/09= Units 58.20 +SC20.16= 78.36
26/07/09-22/09/09= Units 58.20+SC 19.82=78.02
23/09/09-26/11/09 = Units 56.62+SC21.84 = 78.46

Each of these figures are before the credit given by ESB for VAT.

If you add those amounts together they total €487.97 which is as near as makes no difference to the €488 which the DSFA say is the annual amount of the allowance. So clearly, the €488 does not include VAT so I can't understand how you conclude that the €64.00 for 400 units includes VAT.

If you are an ESB customer then you are only being charged VAT on the amounts chargeable after the Electricity Allowance has been deducted, which is how it should be.

BUT if you're a BG customer then BG charges you on the full usage of electricity in the 2 month period without any deduction for the Electricity Alowance. It really depends on which supplier you get your electricity from as to whether or not you're being over-charged VAT. If you're with ESB then you're OK and need take no further action. If you're with BG then although you may well be getting the correct allowance from the DFSA, you are paying too much VAT.

I have just sent a reminder email to Eamon O'Cuiv and await a response.

Will keep you all posted.

According to the ESB website the allowance DOES include VAT,
esb.ie/esbcustomersupply/residential/your_account/free_electricity_allowance.jsp

Id safely say that the amount of allowance paid by the Dept is based on the ESB's rates, and this is how it is worked out:

Unit of elec costs .1410 or 16c (inc VAT)
400 units @ 16c = €64.00(inc VAT)
2400 units @ 16c = €384.00(inc VAT)

Standing Charges(urban) per day = .2520 or .2860 (inc VAT)
365 days @ .2860c = €104.40 (incl VAT)

So 2400 units and 365 days SH = €488.40(including VAT)

As non-ESB users are paid monthly; €488.40 divided by 12 monthly payments equals €40.70. This amount includes VAT.

I am with the ESB btw. The only way there can be an issue as far as i can see is where a non-esb customer is on, say for example, a rural tariff, as that has a higher Standing Charge, so the electricity allowance would not cover the full cost of the standing charge per bill.
This wouldnt be an issue for an ESB customer on the rural tariff as it would be paid regardless, perhaps this is the agreement between esb/dept, that the difference is ignored.

But if the allowance of €40.70 p.m or €488 p.a. includes VAT, why does ESB then give a separate credit for VAT? As I said above, the figures shown (which total €488 p.a.) are before th VAT credit shown in the ESB bill.

Esb give a seperate credit for VAT because that is how they set out the bill. If you look at an ordinary esb bill(someone who does not receive the allowance) the bill is laid out as units used, standing charge then vat. For a customer receiving the allowance, they then credit 400 units. the standing charge then VAT on the units and SC.
TBH i think it was just coincidence that you bills added up to that amount.

I note the months that you chose were Nov 08 to Nov 09, the price of electricity changed a number of times during that period, was the electricity allowance valued at €488 during that period?

I have looked over my bills from Nov 09 and worked out the next 2 bills which bring me up to Nov 10 (800 units and 120 days days SC + VAT),
This Period of 365 days equals €488.50 inc VAT, so i will actually owe the dept 10c

The ESB website does indeed say that the electricity allowance includes VAT, which means that the 400 units credit of €x plus €x in respect of the SC must, by definition, include VAT. So why then give a further credit for VAT (if the allowance included VAT there would be no need for the further credit)?

For example (ESB-type bill):

400 units @ 16c (incl VAT) = 64.00
Free allowance units 400 = 56.40 (Cr)
Deficit (i.e. VAT) 7.60 (Dr)
If we accept that the allowance includes VAT then the credit should equal 64.00. I don't see how it can include VAT; surely that is why ESB then give credit for the VAT charged on the free 400 units. I am the first to admit that Maths was never my strong point but I do think I'm right on this one.

As to what the amount of the allowance was Nov 08 - 09 sorry but I really don't have a clue; the DFSA website doesn't state anywhere what the monetary value of the allowance is; it's always simply specified in units and SC. Presumably as the price of electricity changes, the allowance will do likewise to reflect those changes.

But my concern is with the amount of VAT I am paying as a non-ESB customer and I think we've got a little off-topic somehow; I was quite happy with the credits etc I got whilst with ESB. I have in fact asked DFSA to say whether or not the allowance includes VAT and await their response, as I still await a response from the Minister.

For non ESB customers you receive E 80.40 per month paid to the post office or your bank

I can't think of any other way of explaining this, so i will try as best i can.

You started this thread on the basis of this argument:
If you're an ESB customer the Electricity Allowance is incuded in and deducted from your bill. The important point here is that ESB only charges VAT on the NET sum i.e the amount chargeable after deducting the Electricity Allowance.

If your supplier is other than ESB you receive a monthly payment into your bank account from the Dept of Social Protection. However, the (non-ESB) supplier charges VAT on the FULL amount of your bill, effectively ignoring the Electrcity Allowance.

Right, so you've told us that you were informed that the allowance is worth €40.70 per month(non-esb) or €488 p/a (esb, though it seems to be 488.40 i think).
I have shown you that 2400 units of electricity + 365 days Standing Charge(urban) + VAT equals €488.40 p/a, or €40.70 per month. That €40.70 a month includes VAT, which is why you are billed for it by your provider.

"For example (ESB-type bill):

400 units @ 16c (incl VAT) = 64.00
Free allowance units 400 = 56.40 (Cr)
Deficit (i.e. VAT) 7.60 (Dr)
If we accept that the allowance includes VAT then the credit should equal 64.00. I don't see how it can include VAT; surely that is why ESB then give credit for the VAT charged on the free 400 units. I am the first to admit that Maths was never my strong point but I do think I'm right on this one."

Im afraid you have totally lost me on that one, because for one the bill is not written like that so i don't understand why you have laid it out like that and secondly just because the allowance includes vat doesnt not mean that the ESB have to change the whole layout of their bill just for SW customers. The Esb layout the bill as:
A general units used
b standing charges
c vat on a+b
d free units allw(Cr)
e free standing charge allw(Cr)
f vat on d+e (Cr)

A-C is how a normal bill looks, then all the components of the free allowance are included underneath.

"As to what the amount of the allowance was Nov 08 - 09 sorry but I really don't have a clue; the DFSA website doesn't state anywhere what the monetary value of the allowance is; it's always simply specified in units and SC. Presumably as the price of electricity changes, the allowance will do likewise to reflect those changes."

That was the point i was trying to make, you gave bills dated 08-09, yet we are talking about an allowance in the present, the allowance may have been different then. Hence the reason i used more recent bills.

hi there, i was wondering if anybody could update me on the arguement above as i think the pso and vat point have changed recently.
is there any gain on being with esb rather than bord gas etc?
thanks