Care Home Energy Costs per Bed UK (2026): About £33 a Week in Our 40-Bed Example, and How to Cut It

Last updated: 26 October 2026

How much does energy cost per bed in a UK care home? In our worked example, a 40-bed home using 200,000 kWh of electricity and 300,000 kWh of gas a year pays about £69,520 a year at government average business prices, or about £1,738 per bed, roughly £33 a bed each week. That assumes 0% VAT on qualifying electricity, 5% on gas and no Climate Change Levy. If the same home were wrongly billed 20% VAT and the levy, it would pay about £86,112, or £16,592 more. This SwitchSquid guide shows how to work out your own cost per bed, what pushes it up, and where care homes most often overpay. If you get quotes through our form, we may be paid by the supplier you choose; the quote service is free to you.

Sources: DESNZ: gas and electricity prices in the non-domestic sector (tables 3.4.1 and 3.4.2), HMRC VAT Notice 701/19, GOV.UK: Climate Change Levy rates and GOV.UK: exemptions from Climate Change Levy, all checked on 26 October 2026. This is general information, not tax advice.

Why measure energy per bed?

Total energy spend tells you how big the bill is. Cost per bed tells you whether it is reasonable. It lets an owner compare homes in a group, track a single home year on year, and explain energy costs in fee discussions with local authorities and families. It also exposes problems fast: if one home costs far more per bed than another of a similar age and size, the cause is usually a contract, a tax error or a building issue you can fix.

Care homes are heavy energy users by nature. Residents need warm rooms day and night, hot water is used constantly, and laundries, kitchens, lifts, call systems and medical equipment run around the clock. That makes the rate you pay and the tax treatment matter more than in most businesses.

Who this guide is for

It is for owners and managers of residential and nursing homes in Great Britain who pay business energy rates and want to check whether their bills are reasonable before a renewal. If your home is part of a group on a central contract, use the per-bed figures to compare sites with each other rather than to judge the contract on its own.

Our 40-bed worked example

We used DESNZ’s average business prices for April to June 2026, published on 29 September 2026. A home using 200,000 kWh of electricity sits in the “small” electricity band (20,000 to 499,000 kWh a year), and 300,000 kWh of gas sits in the “small” gas band (278,000 to 2.78 million kWh). Because a qualifying care home shouldn’t pay the Climate Change Levy, we used DESNZ’s prices excluding the levy. The usage figures are our illustration, not an industry benchmark. The gas line uses the same 40-bed home, 300,000 kWh a year and unrounded DESNZ gas price of 4.3746p as our care home gas contracts guide.

DESNZ prices are all-in averages, so they already include standing charges spread across each unit. Your own contract will have its own unit rates and daily standing charges, so treat this as a benchmark, not a quote.

What happens if the tax is wrong

Care England has said it still sees care homes charged the full rate of VAT instead of the reduced rate. Here is what that would cost the same 40-bed home, using DESNZ’s prices including the levy and 20% VAT on both fuels.

HMRC’s Notice 701/19 lists homes providing care for the elderly or disabled as residential accommodation, so their supplies count as qualifying use. From 1 October 2026 to 31 March 2027, qualifying electricity in Great Britain is zero-rated, and qualifying gas carries 5%. If 60% or more of a supply is for qualifying use, the whole supply counts; below that, it is split. GOV.UK also lists homes for the elderly and disabled as domestic use excluded from the Climate Change Levy, which is 0.801p per kWh from 1 April 2026.

How to work out your own cost per bed

1. Add up 12 months of energy spend. Take every electricity and gas bill for the last year, for every meter at the home, including annexes and laundries.

2. Split out VAT and levy. Note the VAT rate on each bill and whether a Climate Change Levy line appears. This is where errors show up.

3. Divide by registered beds. Use registered beds for comparison between homes. You can also divide by occupied beds to see the cost that fees need to cover.

4. Divide by 52 for a weekly figure that sits alongside your weekly fee rates.

5. Work out your price per kWh. Divide your charges before VAT by the kWh used. Compare it with the DESNZ figures below for your size band.

What pushes the cost per bed up

• Older buildings. Poor insulation, single glazing and long pipe runs mean more heat lost for every resident kept warm.

• Electric heating or hot water. Electricity costs several times more per kWh than gas, so homes that heat with electricity usually have a higher cost per bed.

• In-house laundry and kitchens. These are big, steady loads. Efficient machines and running full loads help.

• Low occupancy. Heating and lighting a home with empty rooms spreads the same bill over fewer residents.

• The wrong contract. Rollover or out-of-contract rates, a contract signed at a peak, or tolerance bands that penalise usage changes.

• Tax errors. Paying 20% VAT or the levy on qualifying supplies, as in the example above.

Ways to bring it down

1. Fix the tax first. Send each supplier a VAT declaration and levy certificate for every meter, and ask about reclaiming past overcharges. Our care home energy VAT guide explains the paperwork.

2. Renew early. Start up to six months before the end date, so you aren’t forced into rollover rates over winter. See our winter renewal checklist.

3. Check tolerance bands. Care England suggests negotiating to widen or remove tight usage bands, which a cold winter can easily break.

4. Tune the heating. Zone controls, thermostatic radiator valves and boiler servicing cut waste without making residents cold.

5. Look at the laundry. Efficient machines, full loads and lower wash temperatures where infection control allows.

6. Compare suppliers. Our nursing home energy suppliers guide covers what to ask each one.

Our view

A cost of around £33 a bed each week is a reasonable benchmark for a mid-sized gas-heated home at DESNZ average business prices for April to June 2026 (published 29 September 2026), but the tax treatment alone can swing it by about £8 a bed each week. Start by checking every bill for the VAT rate and a levy line, then work out your own cost per bed and price per kWh against the DESNZ figures. If either looks high, get quotes before your contract next renews.

FAQ

How much does energy cost per bed in a care home?

In our 40-bed example, using 200,000 kWh of electricity and 300,000 kWh of gas a year at DESNZ average prices for April to June 2026, it comes to about £1,738 per bed a year, or about £33 a week. Your figure will depend on your building, heating system, occupancy and contract.

Do care homes pay VAT on energy?

Qualifying supplies to care homes for the elderly or disabled get the reduced rate. From 1 October 2026 to 31 March 2027, qualifying electricity in Great Britain is 0%, and qualifying gas is 5%, according to HMRC’s Notice 701/19. You need to give each supplier a VAT declaration.

Do care homes pay the Climate Change Levy?

They shouldn’t on qualifying supplies. GOV.UK lists homes for the elderly and disabled as domestic use excluded from the levy, which is 0.801p per kWh from 1 April 2026. Your supplier needs the right certificate before it can remove the charge.

What is a good price per kWh for a care home?

DESNZ’s average for businesses using 20,000 to 499,000 kWh of electricity a year was 27.87p per kWh excluding the levy for April to June 2026. For gas users in the 278,000 to 2.78 million kWh band it was 4.37p. If your all-in price is well above these, a quote is worth getting.

How can a care home reduce its energy costs per bed?

Fix VAT and levy errors first, then renew early to avoid rollover rates. After that, look at heating controls, laundry efficiency and insulation. Comparing quotes for every meter at renewal also helps.

Should I measure cost per registered bed or per occupied bed?

Use registered beds to compare homes and track trends, because the figure stays stable. Use occupied beds to see what fees need to cover. Tracking both shows whether a rise is about prices or occupancy.