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HMRC internal manual

VAT Water and Sewerage Services

Supplies of hot water and steam for heating, laundry or other purposes

Heated water

Where water is heated and supplied to a customer at a temperature higher than it was before it was heated, it is not taxed like other supplies of water. Instead, it is taxed as a supply of heat. It does not matter if the water was heated by one person and supplied to the final customer by another, or heated and supplied by the same person. In either case, the water will have been heated and the supply is treated, not as a supply of water, but as a supply of heat.


Steam is the gaseous form of heated water and for these purposes is treated as heated water.

Natural hot springs

Naturally occurring hot water (arising from hot springs etc) is zero-rated. However, water deliberately heated by geo-thermal, solar or other similar methods is treated as ‘heated water’ because it has been deliberately heated.

Supplies for domestic or charity non-business use

In most circumstances heated water will be taxed at the full standard rate. However, supplies of heated water for domestic use or charity non-business use are taxed at the reduced rate- see

Notice 701/19 Fuel and power (GOV.UK)