Who provides our water?
Scottish Water is the only wholesale supplier of water in Scotland, and provides clean drinking water to 2.46 million domestic properties and 130,000 business premises across the country. Scottish Water is wholly owned by the Scottish Government and was founded in 2002 by a merger of West of Scotland Water Authority, East of Scotland Water Authority and North of Scotland Water Authority under the Water Industry (Scotland) Act 2002.
Why do we pay for water?
Water and waste water charges are necessary to pay for the upkeep of pipes and pumps that supply our water, and to maintain and improve the 30,000 miles of sewer pipes and 1,800 waste water treatment works throughout Scotland.
Who do we pay for water?
Domestic properties in Scotland pay for water and waste water services through their Council Tax. Business customers pay for their water and waste water services through a licensed provider (also known as a water supplier). Since deregulation of the water market in Scotland in 2008, business customers have been able to choose their own licensed provider. Scotland was the first country in the world to offer business customers this choice.
How are water charges calculated?
There are three basic charge elements which apply to most business premises – water, waste water and drainage. These charges are further split into a fixed rate and a volumetric rate for water and waste water, and into individual elements of property drainage and roads drainage. This makes a total of six billing elements, which are explained fully below.
If your property has a water meter, your water and waste water charges are based on consumption recorded in cubic metres (one cubic metre = 1,000 litres) by the meter. If you don’t have a water meter, your charges are based on the rateable value (RV) of the property as determined by the Scottish Assessors Association. If you would like a water meter, please contact us and we will liaise with Scottish Water to have a meter installed at your property free of charge. Drainage charges for all customers are based on the RV.
Fixed water charge: this is an annual fee based on the size of your meter, and covers the upkeep of the pipes and pumps that supply your water. If you do not have a meter, these charges are based on the RV of the premises.
Volumetric water charge: this is a charge for the amount of water you have used, measured by your meter.
Fixed waste charge: this is an annual fee based on the size of your water meter, and covers the upkeep of the pipes and pumps that remove waste water from your property and the maintenance of the waste water treatment works. If you do not have a meter, these charges are based on the rateable value (RV) of the premises.
Volumetric waste charge: waste water is the proportion of your water that goes down the drain and this is usually charged at 95% of your recorded water usage. In some cases this figure can be reduced, depending upon your type of business, and with the permission of Scottish Water.
Property drainage charge: as you are connected to the public water and sewerage system, you are charged for the cost of collecting and treating rain water from your property. Charges are based on the RV of your property, even if you are exempt from commercial rates.
Road drainage charge: this covers your contribution to the public roads drainage system and keeping the roads free from flooding. Charges are based on the RV of your property, even if you are exempt from commercial rates.
What Rateable Value is used?
Until 31 March 2017, the water industry used historic rateable values to calculate water and sewerage charges at premises that have not been metered, and for property and roads drainage charges for all customers with a sewerage service. From 1 April 2018, the Scottish Government put in place an initiative to start using the rateable value most recently assigned by the Scottish Assessors Association. The change to a live rateable value is being made to make charges fairer and will mean that all customers will be charged on a consistent basis. As a result of the change, some customers may see an increase in their charges, whilst others may receive lower bills. Transition arrangements are in place for a three year period, and from 1 April 2020 all rateable value based charges will be calculated using the live RV. The Scottish Government FAQ document explaining the charges can be seen by following the link below https://beta.gov.scot/publications/rateable-value-faq/
VAT ON WATER CHARGES
VAT is chargeable at the standard rate on clean water charges for all customers whose main business activity falls within divisions 1 to 5 of the 1980 Standard Industrial Classifications (SIC) as used by Companies House and shown below.
SIC code 1 – Energy and water supply industries
SIC code 2 – Extraction of minerals and ores other than fuels; manufacture of metal, mineral products and chemicals
SIC code 3 – Metal goods, engineering and vehicle industries
SIC code 4 – Other manufacturing industries
SIC code 5 – Construction
Customers whose activities do not fall into one of these 5 divisions are not liable for VAT on their water charges. For those customers whose business does fall into one of the divisions, VAT is only applicable on clean water charges. Waste water and drainage charges have zero rated VAT liability.
All other elective services provided by Pinnacle Business Water have a standard rated VAT liability. Elective services are any services that fall out with the default water, waste water and drainage charges that every business is required to pay. The only exception to this is infrastructure charges for new water connections, which are outside the scope of UK VAT.
Full details of the applicable VAT guidelines can be found in the HMRC Water and Sewage Services Reference Notice 701, which is available on the on the HMRC website.
VAT LEGAL INFORMATION
Lettermay Limited Trading As Pinnacle Business Water.
VAT Number: 976 8337 59.
Registered in Scotland. Registered Number: SC361085.
Registered office address: 67 Accord Avenue, Paisley PA2 7DN.
Principle place of business: Suite 110, Old Embroidery Mill, Abbey Mill Business Centre, Paisley PA1 1TJ.