What is a microbusiness?
A microbusiness, as defined under UK energy regulations, is a small business that meets certain criteria related to employee numbers, turnover, or energy usage. According to Ofgem’s guidance on microbusiness definition under UK energy regulations, your business is considered a microbusiness if it meets any one of the following conditions:
Employs fewer than 10 people (or their full-time equivalent) and has an annual turnover or balance sheet of no more than €2 million; or
Consumes no more than 100,000 kWh of electricity per year; or
Consumes no more than 293,000 kWh of gas per year.
This classification is important because microbusinesses are given special protections when it comes to energy contracts and billing. For example, microbusinesses benefit from clearer contract terms, easier switching processes, and greater transparency from energy suppliers. This helps ensure that small businesses are not disadvantaged by complex or unfair energy deals.
If your business qualifies as a microbusiness, you have specific rights under energy regulations. These include the right to receive clear information about your energy contract, protection against automatic contract rollovers, and the ability to access support when dealing with third party intermediaries or brokers. For more details about working with brokers and your rights, see microbusiness definition under UK energy regulations.
Understanding whether your business is a microbusiness can help you take advantage of these protections and manage your energy supply more effectively. For a broader look at the challenges and opportunities small businesses face in the energy market, visit our page on Energy issues for small businesses. This can help you make informed decisions about your energy contracts and find ways to reduce costs.
Criteria to check if your business is a microbusiness
Criteria to check if your business is a microbusiness
To determine if your business qualifies as a microbusiness under UK energy regulations, you’ll need to check a few key criteria. These are set out in the Gas and Electricity Regulated Providers (Microbusinesses) Order 2011 and are used by energy suppliers to decide if your business is entitled to certain protections and contract terms.
Size and Supply Thresholds
A business is classed as a microbusiness for energy purposes if it meets any one of the following criteria:
Fewer than 10 employees (or full-time equivalent) and an annual turnover or balance sheet not exceeding €2 million.
Annual electricity consumption of no more than 100,000 kWh.
Annual gas consumption of no more than 293,000 kWh.
You only need to meet one of these thresholds to be considered a microbusiness.
1. Employee and Financial Threshold
Employees: Your business must have fewer than 10 employees. This includes both full-time and part-time staff, but part-time employees are counted as a fraction of a full-time equivalent (FTE). For example, two half-time employees count as one FTE.
Turnover or Balance Sheet: Your business’s annual turnover or balance sheet total must not exceed €2 million (the euro amount is set by the relevant EU definition and remains in use in UK regulations).
2. Electricity Consumption
If your business uses no more than 100,000 kilowatt hours (kWh) of electricity per year, you qualify as a microbusiness under this criterion, regardless of your number of employees or turnover.
This is roughly equivalent to the usage of a small office or shop.
3. Gas Consumption
If your business uses no more than 293,000 kWh of gas per year, you also qualify as a microbusiness, even if you exceed the other thresholds.
How to Check Your Business’s Energy Usage
To assess whether your business meets the energy consumption criteria, you’ll need to gather accurate data about your usage:
Check your energy bills: Most bills show your annual consumption in kWh for both gas and electricity. If you can’t find this information, contact your supplier for details.
Review your contract: Some contracts state your expected or maximum annual usage.
Estimate if needed: If you don’t have a full year’s data, you can estimate based on average monthly usage and multiply by 12.
Practical Examples
Example 1: A small bakery with 7 employees, a turnover of £900,000, and annual electricity use of 80,000 kWh qualifies as a microbusiness on all counts.
Example 2: A local garage with 12 employees (over the staff limit), but only 90,000 kWh of electricity use per year, still qualifies as a microbusiness because it meets the energy consumption threshold.
Example 3: An online retailer with 9 employees and a turnover of £2.5 million would not qualify as a microbusiness unless their energy consumption is below the relevant thresholds.
Common Questions
What if I’m close to the threshold?
It’s important to check your latest bills and keep track of your usage. If you’re near the limit, your status could change if your business grows or your energy use increases.
Does the type of premises matter?
The criteria focus on employee numbers, turnover, and energy consumption, not the size or type of premises. Whether you work from an office, shop, or industrial unit, the same rules apply.
What if I have multiple sites?
If your business operates from more than one location, you’ll need to add up the energy use and employees across all sites to determine if you qualify as a microbusiness.
By carefully checking these criteria and using your most recent data, you can be confident about your business’s microbusiness status under energy regulations. This status can affect the type of contracts you’re offered and the protections you receive from energy suppliers.
Why it matters: benefits and protections for microbusinesses
When your business qualifies as a microbusiness under UK energy regulations, you gain important rights and protections designed to make managing your energy supply simpler and fairer. Understanding these benefits can help you avoid unexpected costs, resolve issues more easily, and make better choices for your business.
Clearer Rights with Energy Suppliers
Microbusinesses are protected by specific rules set by Ofgem, the UK’s energy regulator. These rules mean energy suppliers must treat microbusiness customers differently from larger companies. For example, suppliers are required to provide clear, understandable contract terms and ensure you know exactly what you’re agreeing to before you sign up. This transparency helps prevent hidden charges or confusing contract clauses.
Protections for Billing, Contracts, and Disputes
As a microbusiness, you benefit from extra safeguards around billing and contracts. Suppliers must give you advance notice before your contract ends, making it easier to plan ahead. They are also required to make bills and statements straightforward and accurate. If you ever face problems with your energy bill, your microbusiness status can help ensure your supplier addresses your concerns quickly and fairly.
If you run into problems with your business energy supplier or broker, such as disputes over contract terms or poor service, being classified as a microbusiness means you have access to formal complaint processes and, in some cases, free dispute resolution services. This can make it easier and less stressful to resolve disagreements.
Easier Switching and Better Deals
Microbusinesses have more flexibility when it comes to switching your business to a new energy supplier. Suppliers must make the switching process straightforward and cannot block you from moving to a better deal at the end of your contract. You’ll also receive clearer information about your options, helping you to compare prices and services more easily.
Additionally, microbusinesses are often able to negotiate shorter contract terms and avoid automatic rollover contracts, giving you more control over your energy costs and the freedom to shop around for better rates.
Why These Protections Matter
These legal protections are designed to level the playing field, recognising that smaller businesses may not have the time or resources to navigate complex energy markets. By ensuring fair treatment, transparent billing, and easier dispute resolution, microbusiness status helps you focus on running your business, not fighting with your energy supplier.
Understanding and using your microbusiness rights can help you save money, avoid hassle, and get the most out of your business energy contracts. If you’re unsure about your current status or want to learn more about managing your energy supply, explore the related topics linked above for practical advice and next steps.
How to check your business status step-by-step
How to check your business status step-by-step
Determining whether your business qualifies as a microbusiness under UK energy regulations is important, as it affects your rights and protections when dealing with energy suppliers. Here’s a clear, step-by-step guide to help you check your business status.
1. Understand the microbusiness definition
According to Ofgem, the UK energy regulator, your business will usually be classed as a microbusiness for energy purposes if it meets any of the following criteria:
Fewer than 10 employees (or their full-time equivalent) and an annual turnover or balance sheet no greater than €2 million (around £1.7 million).
Annual electricity consumption of no more than 100,000 kWh.
Annual gas consumption of no more than 293,000 kWh.
If your business meets just one of these conditions, it is considered a microbusiness for energy contract purposes.
2. Gather information about your business
To check if you qualify, you’ll need to collect some key details:
Number of employees: Count all staff, including part-time workers (add up their hours to calculate full-time equivalents).
Annual turnover or balance sheet total: You can find this information in your latest annual accounts or financial statements.
Energy consumption: Look for your total energy use over the last year, measured in kilowatt hours (kWh).
3. Find your energy consumption data
You can check your energy consumption by:
Reviewing your energy bills: Most suppliers include your annual consumption on your bill or statement. Look for a figure in kWh.
Contacting your energy supplier: If it’s not clear on your bill, your supplier can provide your annual usage.
Checking your smart meter or meter readings: If you keep regular records, add up your readings over a 12-month period.
4. Locate your energy contract details
Your contract will state your business name, address, and sometimes your business type. It also outlines your tariff, contract length, and any terms specific to microbusinesses. If you can’t find your contract, ask your supplier to send you a copy.
5. Compare your details to the criteria
Employee and turnover check: Do you have fewer than 10 staff and a turnover under €2 million? If yes, you qualify.
Energy use check: Is your annual electricity use under 100,000 kWh or gas under 293,000 kWh? If yes, you qualify, even if your turnover or staff numbers are higher.
Example:
If you have 8 employees, a turnover of £1.5 million, and use 80,000 kWh of electricity each year, you are a microbusiness.
Alternatively, if you have 15 employees but use only 90,000 kWh of electricity annually, you still qualify based on your energy consumption.
6. What if you’re unsure?
If you’re not certain about your figures or how to calculate them, don’t worry:
Contact your energy supplier: They are required by law to help you understand your status and provide your consumption data.
Speak to your accountant or bookkeeper: They can help with turnover, balance sheet, and employee numbers.
Ask for clarification: If you’re still unsure, Ofgem or a local business support service can offer guidance.
7. Keep records up to date
Business circumstances can change. Review your status each year, especially if your staff numbers, turnover, or energy use fluctuate. Keeping accurate records will help you stay on top of your eligibility and ensure you benefit from the protections available to microbusinesses.
By following these steps, you can confidently determine whether your business qualifies as a microbusiness under UK energy regulations, ensuring you receive the correct support and contract terms from your supplier.
What to do if your business is a microbusiness
If your business qualifies as a microbusiness under UK energy regulations, you benefit from extra protections and rights when it comes to energy contracts and billing. Understanding these rights can help you save money, avoid common pitfalls, and make the most of your microbusiness status.
Know Your Rights on Energy Contracts and Billing
Microbusinesses have specific legal rights under Ofgem rules. For example, energy suppliers must:
Make contract terms clear and easy to understand.
Provide key information before you sign a new contract, including prices, contract length, and any exit fees.
Give you at least 30 days’ notice before your contract ends or prices change.
Allow you to switch suppliers easily at the end of your contract, with no penalties if you’ve given the required notice.
You also have the right to accurate billing and to challenge incorrect charges. If you think your bill is wrong, you can dispute it and request evidence from your supplier. For step-by-step guidance, see our advice on dealing with your business energy bills.
Manage Your Energy Bills Effectively
Being proactive about your energy use and billing can help you control costs:
Regularly check your bills for errors or unexpected charges.
Submit meter readings on time to avoid estimated bills.
Review your contract renewal dates so you’re not rolled onto a more expensive tariff.
Consider the simplest ways to save energy to lower your overall consumption.
Keeping good records and understanding your usage patterns also puts you in a stronger position if you need to challenge a bill or negotiate a better deal.
Using Your Microbusiness Status to Your Advantage
Suppliers know that microbusinesses have more freedom to switch and are protected by additional regulations. Use this to your advantage:
Don’t be afraid to shop around. You can compare UK energy suppliers to find the best rates and terms for your business.
If you’re unhappy with your current supplier, you can switch at the end of your contract without penalty, as long as you provide the correct notice.
If you have a dispute with your supplier, remind them of your microbusiness rights. If the issue isn’t resolved, you may be able to escalate your complaint.
By staying informed and making the most of your microbusiness protections, you can keep your energy costs under control and ensure you’re treated fairly by suppliers. For more practical advice, explore our guides on dealing with your business energy bills and simplest ways to save energy.
What to do if your business is not a microbusiness
If your business does not meet the criteria for a microbusiness under UK energy regulations, it’s important to understand how this affects your rights, protections, and options when dealing with energy suppliers.
How rights and protections differ
Microbusinesses benefit from specific protections under Ofgem rules, such as clearer contract terms, easier switching processes, and limits on back-billing. If your business is larger than a microbusiness, these protections may not apply in the same way. For example, you might not receive as much notice about contract changes or renewal dates, and your ability to dispute bills or terminate contracts early could be more limited.
Larger small businesses are usually treated more like commercial customers, meaning you may need to pay closer attention to the terms and conditions of your energy contracts. It’s essential to check contract lengths, notice periods, and any automatic renewal clauses before signing up.
Energy contract options for larger small businesses
If your business is not a microbusiness, you still have several options for managing your energy supply:
Negotiating contracts: You can often negotiate rates and terms directly with energy suppliers or through a broker. Larger consumption may give you more bargaining power.
Fixed vs. variable tariffs: Consider whether a fixed-rate contract (where your unit price stays the same for a set period) or a variable tariff (which can change with the market) suits your business best.
Group purchasing: Some businesses join buying groups or consortiums to secure better rates by pooling their energy needs.
Energy efficiency: Investing in energy-saving measures can help reduce overall costs, regardless of your contract type.
Where to get advice and support
Navigating energy contracts and resolving disputes can be complex for businesses that don’t qualify as microbusinesses. If you need guidance, it’s a good idea to seek support from professional advisers, business networks, or trade associations familiar with the energy market.
For more detailed information and practical tips on managing your energy supply, dealing with billing issues, and understanding your rights, visit our page on energy issues for small businesses. This resource covers a wide range of topics to help you make informed decisions and manage your energy costs effectively.
Related topics and next steps
After checking whether your business qualifies as a microbusiness, it’s important to understand what this means for your energy contracts, billing, and overall energy management. To help you take the next steps and make informed decisions, we’ve highlighted several related topics you may find useful – whatever your microbusiness status or future plans.
If you’re planning to relocate your business, it’s essential to know how your microbusiness status can affect your energy supply arrangements. Find out what to do before, during, and after a move by reading our guidance on dealing with your energy supply when you move business premises. This will help you avoid unexpected charges and ensure a smooth transition.
Managing energy bills is a key concern for any small business. Learn more about your rights, how to check your bills for accuracy, and what to do if you’re struggling to pay by visiting our page on dealing with your business energy bills. This guide includes practical tips for budgeting and understanding the breakdown of charges, which is especially relevant if you’re entitled to microbusiness protections under Ofgem’s rules.
If you’re experiencing difficulties with your energy supplier or broker – such as disputes over contracts, poor customer service, or unclear charges – our resource on problems with your business energy supplier or broker can help. It explains your legal rights under energy regulations, steps you can take to resolve complaints, and where to get further support if needed.
Thinking about getting a better deal or switching to a supplier that better meets your needs? Our guide to switching your business to a new energy supplier outlines the process, including notice periods, contract terms, and what microbusinesses should expect under Ofgem’s switching protections.
No matter your current situation, exploring these topics can help you take control of your business’s energy supply and costs. Whether you’re staying put, moving premises, considering a switch, or facing issues with your supplier, understanding your rights and options as a microbusiness is the best way to make confident decisions and avoid unexpected problems.
