Household consumers
VAT is not payable on household (domestic) consumer water bills or on sewerage charges.
Commercial and non-household customers
Not all commercial customers are charged VAT on water charges. HM Revenue & Customs (HMRC) determines the type of business that are charged standard rate VAT (17.5%) based on the Standard Industrial Classification code (SIC). This usually applies to businesses involved in manufacturing, engineering and construction processes.
VAT does not apply to sewerage charges for commercial customers.
The above statement is based on the legislation in place at 1 April 2010. If the legislation subsequently changes the above statement will be updated.