Household consumers
VAT is not payable on household (domestic) consumer water bills or on sewerage charges.
Non-household customers
Not all non-household customers are charged VAT on water charges. HM Revenue & Customs (HMRC) determines the type of organisations that are charged standard rate VAT (20 per cent) based on the Standard Industrial Classification code (SIC). This usually applies to organisations involved in manufacturing, engineering and construction processes.
VAT does not apply to sewerage charges for non-household customers.
The above statement is based on the legislation in place at 4 January 2011. If the legislation subsequently changes the above statement will be updated.