Business energy security deposits UK: how much suppliers can ask and how to get it back

Last updated: Tuesday 6 October 2026 (Europe/London).
Next update: if Ofgem updates its guidance on non-domestic security deposits, or in early 2027 alongside our renewal-season guides.
By: Switch Editorial Team, Switch Squid Ltd

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As of 6 October 2026, a business energy supplier can ask for a security deposit if its credit check flags a risk, and Ofgem’s guidance says a deposit worth up to three months of estimated energy use is typically adequate and should not exceed six months — so on a £6,000-a-year business electricity bill, that points to a typical deposit of up to about £1,500. There is no business price cap and deposits are not banned, but microbusinesses must be told about any deposit in the contract’s principal terms before they agree, and you can ask for a review or a refund once your credit improves. SwitchSquid can help you compare quotes and ask which suppliers need a deposit. Our quote buttons go to SwitchSquid’s own business energy service; we may be paid if you arrange a contract through it.

Sources: Ofgem — Best Practice Guide: Non-Domestic Security Deposits (July 2023), Ofgem — energy advice for microbusiness and SME consumers and Ofgem — Microbusiness Strategic Review decision.

Why business energy suppliers ask for deposits

Business energy works differently from home energy. There is no Ofgem price cap on business tariffs, contracts are usually fixed for one or more years, and the supplier carries the risk of you not paying for energy you have already used. Before offering a contract, most suppliers run a credit assessment on the business. If the result falls below the supplier’s threshold, it may still offer you a contract, but only if you pay a security deposit up front.

Ofgem describes deposits as one way suppliers manage credit risk, alongside credit insurance, bank guarantees and upfront payments. It also points out that a deposit can be useful for the customer, because it means a business with a thin or weak credit file can still get an offer rather than being refused or left on more expensive out-of-contract rates.

The businesses most likely to be asked are new companies with little trading history, sole traders and partnerships whose personal credit is checked, businesses with missed payments or county court judgments, and businesses that have not filed accounts on time at Companies House. Larger energy users and complex contracts can face bespoke arrangements, but the principles are the same.

How much a business energy deposit can be

Ofgem has not set a hard legal limit for business deposits. Its consumer advice says suppliers should keep the amount reasonable and that up to three months of future energy use is typically adequate and should not exceed six months. In its 2023 best practice guide, Ofgem notes that some suppliers base deposits on three months’ estimated consumption, linked to how long it would take to disconnect a site after non-payment.

The same guide says the size should reflect the level of credit risk assessed for your business, and that billing frequency matters: a business billed monthly would likely face a lower deposit than one billed quarterly, because less money can build up unpaid between bills. That gives you a practical lever. If a supplier quotes a deposit based on quarterly billing, ask what it would be on monthly Direct Debit.

Deposit rules and best practice at a glance (checked 6 October 2026)

Question	What Ofgem says	Status	What to do
Can a supplier ask for a deposit?	Yes, to manage credit risk after assessing creditworthiness	Allowed	Ask how the credit check is done and how long it takes
How much is reasonable?	Up to 3 months of estimated use is typically adequate; should not exceed 6 months	Ofgem guidance	Ask for the calculation in writing
Must I be told before signing?	Any deposit requirement must be in a microbusiness contract’s principal terms	Licence condition	Check the principal terms before you agree
Can the amount change with billing?	Monthly billing would likely mean a lower deposit than quarterly	Best practice	Ask for a monthly Direct Debit quote
Can I get it back early?	Suppliers should allow a review and partial or full refund after a material improvement in creditworthiness	Best practice	Send updated accounts and ask for a review
When is it returned?	Once the meter has left supply and all charges are cleared; ideally offset against the final bill	Best practice	Give a closing meter reading and check the final bill
Will I earn interest?	Some suppliers pay interest, around 1% in Ofgem’s advice; it is not required	Varies by supplier	Ask before you pay

Ofgem’s best practice guide is voluntary, but Ofgem says it will monitor how suppliers manage credit risk and will not hesitate to strengthen the rules if evidence shows it is needed. Your strongest legal protection as a microbusiness is the requirement that a deposit is disclosed in the principal terms before you contract and confirmed in writing afterwards.

What a supplier should tell you when it asks for a deposit

Ofgem’s guide sets out what a supplier following best practice would put in writing when it asks for a deposit:

• that it has assessed your creditworthiness and you did not meet its threshold;
• the basis for the deposit, the amount and how it was calculated;
• when the deposit will be repaid;
• whether it can offer alternatives to a deposit, and how to ask for them, including any changes to the contract terms.

If any of that is missing, ask for it. A clear explanation lets you compare offers properly. A quote with a slightly higher unit rate and no deposit can be easier on cash flow than a cheaper rate with £2,000 held back for a year or more.

How to reduce or avoid a business energy deposit

1. Get your filings up to date. Ofgem’s guide encourages businesses to keep accounts at Companies House current, because suppliers use them in credit assessments.
2. Offer monthly Direct Debit. Monthly billing reduces the amount a supplier could be owed, which can lower the deposit.
3. Ask about alternatives. Some suppliers accept other ways to manage risk, such as a guarantee or upfront payments, instead of a cash deposit.
4. Compare several suppliers. Credit thresholds differ, so one supplier may ask for a deposit while another does not. A broker or comparison form can ask the question on your behalf.
5. Accept a smart or AMR meter. Ofgem notes that accurate, timely billing helps the supplier manage the account and close it promptly.
6. Ask for a review later. If your trading record or accounts improve during the contract, ask the supplier to reassess and refund some or all of the deposit.

Getting your deposit back when you leave or move premises

Ofgem’s best practice is that the need for a deposit ends once the meter point has moved off supply and all charges on the account have been cleared. Suppliers following that practice say whether the deposit can be used to pay your final bill; where it can, they would show it on the final bill so you do not have to ask. If it cannot be offset, they would repay it promptly once the final bill is settled.

You can speed things up. When you move out or switch, tell the supplier as early as you can and give closing readings for every meter, ideally taken on your last day. Keep a photo of each meter with the date. Respond to any reasonable requests for information until the deposit is returned. If a supplier refuses to return a deposit without a fair reason, complain in writing; microbusinesses and, since December 2024, small businesses can take unresolved complaints to the Energy Ombudsman once the supplier’s complaints process has run its course.

If you are moving to new premises, plan the new contract early. A new supplier may run its own credit check, so you could be asked for a fresh deposit before the old one is returned. Our guide to business energy contract end dates covers renewal timing, and our microbusiness energy rights guide covers complaints and back-billing.

Fit summary

• Good to compare now: new businesses, sole traders, and firms whose renewal quote came with a deposit request.
• Consider asking for alternatives: if the deposit is close to six months of use, or the calculation has not been explained.
• Consider a review request: if you paid a deposit a year or more ago and your accounts have since improved.

Important conditions

• Ofgem’s security deposit guide is voluntary best practice; the disclosure rule in principal terms applies to microbusiness contracts.
• Deposit amounts are set by each supplier after its own credit assessment and can vary widely.
• There is no Ofgem price cap on business energy; compare the full contract cost, including standing charges.
• Worked figures are illustrations based on Ofgem’s three-month guidance, checked on 6 October 2026, not quotes.
• Business and home energy rules are different; this guide is for business premises only.

Final decision card

Asked for a deposit → get the calculation in writing and check it against the three-month guidance.
Deposit too high → ask about monthly billing or alternatives, and compare suppliers that may not ask for one.
Leaving or moving → give closing readings on your last day and check the deposit is refunded or offset on the final bill.

FAQ

Why is my business energy supplier asking for a security deposit?

Suppliers ask for deposits when their credit assessment suggests a risk that bills may not be paid on time. New businesses, sole traders and companies with late filings or missed payments are asked most often. A deposit lets the supplier offer you a contract rather than refusing one.

How much can a business energy deposit be?

There is no fixed legal limit. Ofgem’s guidance says up to three months of estimated energy use is typically adequate and a deposit should not exceed six months. On a £6,000-a-year bill, three months would be about £1,500.

Do I get my business energy deposit back?

Yes, once the account is closed and all charges are paid. Ofgem’s best practice is for suppliers to offset the deposit against the final bill or repay it promptly after the final bill is settled. Give accurate closing meter readings to avoid delays.

Can I ask for my deposit back before the contract ends?

You can ask. Ofgem’s guide says suppliers following best practice should let you request a partial or full refund after a material improvement in your creditworthiness. Send updated accounts or evidence of a better payment record with your request.

Do I earn interest on a business energy deposit?

Not always. Ofgem’s advice notes that some suppliers pay interest of around 1% when the deposit is returned, but this is not required. Ask the supplier before you pay.

How can I avoid paying a deposit on business energy?

Keep your Companies House filings up to date, offer monthly Direct Debit, and ask about alternatives such as a guarantee. Comparing several suppliers also helps, because credit thresholds differ and some may not ask for a deposit at all.

Does the security deposit have to be in my contract?

For microbusinesses, yes. Any requirement for a security deposit must be included in the contract’s principal terms, which suppliers must bring to your attention before you agree and confirm in writing afterwards. Check them carefully before you sign.