Last updated: 15 October 2026
Business water rates are the charges your business pays for clean water, wastewater and drainage. Most of the bill is set by your regional water company, while a separate retailer sends the bill and handles your account. In England and Scotland you can choose that retailer, which is where a business water comparison comes in.
What makes up a business water bill?
A business water bill is usually made up of five main charges: water supply, wastewater, surface water drainage, highway drainage and, for some sites, trade effluent. Each one can include a fixed standing charge as well as a usage or property based charge. Your bill may not show every line, depending on your site and region.
| Charge | What it covers | How it is usually charged | VAT |
|---|---|---|---|
| Water supply | Clean water delivered to your premises | Standing charge plus a rate per cubic metre if metered, or rateable value if unmetered | 0% for most businesses, 20% for industrial users |
| Wastewater (sewerage) | Taking away and treating used water | Often based on the water you use, plus a standing charge | 0% |
| Surface water drainage | Rainwater running off your property into public sewers | Standing charge, rateable value, volumetric rate or site area | Check with your retailer |
| Highway drainage | Rainwater from roads and footpaths | Usually built into wastewater or drainage charges | Check with your retailer |
| Trade effluent | Liquid trade waste discharged to the sewer under consent | Based on the volume and strength of the effluent | 0% |
Water supply and wastewater
On a metered supply you pay a standing charge plus a rate for each cubic metre of clean water, as set out on UMW’s business water page. Wastewater covers taking away and treating used water, and is commonly worked out from the clean water you use. If much of your water does not return to the drain, for example because it goes into your products or evaporates, you may qualify for an allowance.
Surface water and highway drainage
Surface water drainage covers rainwater that runs off your roofs, car park and yard into public sewers. Ofwat says companies can recover this through a standing charge, a rateable value charge, the volumetric rate or a charge based on site area. Highway drainage covers rainwater from roads and footpaths, and Ofwat notes that companies recover this cost from customers regardless of how much they benefit from the road network.
The Consumer Council for Water (CCW) explains that site area charging generally means larger sites pay more, because they shed more rainwater. If you are unsure how your drainage charge was worked out, ask your retailer.
Trade effluent
Trade effluent applies only if your business discharges liquid trade waste, other than surface water and domestic waste, to the public sewer under a consent. NI Water describes it this way, and the same principle applies in Great Britain. Offices and shops usually do not pay it, while food producers, laundries and manufacturers often do.
How are business water rates calculated if you have no meter?
If your premises has no water meter, you are usually charged on the rateable value of the property, plus a standing charge. Dŵr Cymru Welsh Water describes its unmeasured business bill as a standing charge plus a charge per pound of rateable value, with no link to how much water you use.
Ofwat points out that rateable values were last updated in 1990, so changes to a property since then are not reflected. It also notes there are shortcomings in using rateable value as a guide to how much water a site uses. If your business uses little water, a meter may lower your bill, but this depends on your site, so ask your wholesaler or retailer to check before you apply.
Who sets business water rates: the wholesaler or the retailer?
Your regional water company, the wholesaler, sets most of the charges on your bill. Your retailer buys those wholesale services, adds its own retail costs and service, and bills you. You can change your retailer in eligible areas, but you cannot change your wholesaler.
Ofwat describes wholesalers as the appointed companies that own and run the pipes, mains and treatment works. Retailers buy wholesale water and wastewater services and package them for eligible customers, competing for their business. Ofwat’s drainage guidance also confirms that non-household customers pay their retailer, who is then billed by the water company (Ofwat).
Because the wholesale part is the same whichever retailer you use, the savings from switching retailer tend to be smaller than for gas or electricity. UMW’s business water page is open about this, and notes that larger savings often come from fixing estimated reads, claiming drainage rebates and finding leaks. It also records that wholesale rates rose in every region on 1 April 2026, with the size of the rise depending on region, usage and meter size.
How does the business water market work in England?
Since April 2017, eligible businesses, charities and public bodies in England have been able to choose their water retailer. Ofwat says around 1.2 million non-household customers became eligible, and describes it as the largest competitive water retail market in the world when it opened.
The market is run by a market operator, MOSL, which supports wholesalers and retailers with settlement, market codes and the transfer of customer information when you switch. Ofwat regulates the market and licenses retailers. Ofwat also states that price limits apply to customers who do not switch or renegotiate, which gives some protection if you stay put (Ofwat).
Ofwat’s State of the Market report for 2020 to 2021 found awareness of the ability to choose had fallen to 43%, with billing and charging the most common reasons for complaints.
Can you compare business water rates in Scotland, Wales and Northern Ireland?
Yes in Scotland, only for very large users in Wales, and not through a retail market in Northern Ireland. The rules depend on where your premises is, not where your head office is.
| Nation | Can you choose your retailer? | Key point |
|---|---|---|
| England | Yes, since April 2017 | Around 1.2 million eligible non-household customers (Ofwat) |
| Scotland | Yes, since 1 April 2008 | Scottish Water is the wholesaler, over twenty retailers (WICS) |
| Wales | Only sites using over 50 megalitres a year | Clean water only (Ofwat, Hafren Dyfrdwy) |
| Northern Ireland | No retail choice | NI Water sets the charges and bills non-domestic customers (NI Water) |
Scotland
The Water Industry Commission for Scotland (WICS) says all non-household and public sector customers have been able to choose their supplier since 1 April 2008. Scottish Water runs the network as wholesaler, and licensed retailers buy wholesale services from it to resell. WICS also sets regulated default tariffs that every retailer must offer as a safety net (WICS).
Wales
The Welsh Government chose not to open the market to all business customers, so smaller Welsh sites stay with their regional water company (Hafren Dyfrdwy).
Northern Ireland
NI Water charges all non-domestic customers for water, including farms, schools, charities and businesses. Metered sites pay measured charges and unmetered sites pay unmeasured charges. NI Business Info notes that unmeasured charges are based on Net Annual Value rather than rateable value.
Do businesses pay VAT on water?
Most businesses pay no VAT on their water bill. Water supply is zero-rated unless your main business activity is industrial, in which case it carries VAT at the standard rate. Sewerage services are zero-rated for all businesses.
HMRC defines industrial activity as anything in Divisions 1 to 5 of the 1980 Standard Industrial Classification (HMRC VWASS2200):
- Energy and water supply industries
- Extraction of minerals and ores other than fuels, and manufacture of metals, mineral products and chemicals
- Metal goods, engineering and vehicles industries
- Other manufacturing industries
- Construction
HMRC’s manual also confirms that the reception, disposal or treatment of foul water or sewerage is zero-rated for industrial and non-industrial users alike (HMRC VWASS3000). If your retailer holds the wrong industry code, you could be charged VAT by mistake. Our guide to VAT on business energy and water covers this in more detail.
How can you reduce your business water bill?
The biggest savings usually come from making sure you are billed correctly, not only from switching. Work through these checks in order.
- Send regular meter reads. Estimated bills can drift well away from your real use. Submit actual reads and photograph the meter so you have a record.
- Look for leaks. Water lost through a leak on your side of the meter is still recorded as usage. Check for a meter that keeps moving when nothing is running, and get any leak fixed quickly.
- Claim a surface water drainage rebate if it applies. Ofwat says that if no surface water from your property enters a public sewer, for example because it drains to a soakaway, you may qualify for a reduction. You apply with evidence, and some past payments may be refunded.
- Ask about a wastewater allowance. If much of your water does not return to the drain, you may be able to pay wastewater on a smaller volume.
- Check your SIC code and VAT. Make sure your retailer has the right business activity on file, so you are not paying 20% VAT on water supply when you should not be.
- Check whether a meter would help. If you are billed on rateable value and use little water, ask whether a meter would lower your costs.
- Compare retailers. Retail service, payment terms and pricing vary. Comparing can move you off a default tariff and onto terms that suit your site.
A useful parallel comes from energy. SEFE Energy warns that out of contract energy rates are typically considerably higher than contracted prices, and advises speaking to your supplier or broker early. Water markets work differently, but the same habit of reviewing your terms before they roll over is worth keeping. Our contract renewal guide explains how that works for gas and electricity.
What do you need for a business water comparison?
To compare business water rates you need a recent bill and a few details about your supply.
- Your supply point ID (SPID), shown on your bill
- Your meter serial number
- Your annual usage in cubic metres
- Your current retailer and contract end date
According to UMW’s business water page, a switch usually takes 6 to 20 working days once the new retailer applies, with no interruption to your supply and no engineer visit. If you are not sure what each line on your bill means, our guide to what a utility bill includes is a good starting point, and the UMW Health Check can review your bills for errors.
FAQs
What are business water rates?
They are the charges for clean water, wastewater, drainage and, where relevant, trade effluent. Most of the cost is wholesale charges set by your regional water company, plus a retail element.
Can I switch my business water supplier?
In England you can choose your retailer if your business is eligible, and in Scotland all non-household customers can switch. In Wales only sites using over 50 megalitres a year can switch, and only for clean water. Your pipes and supply stay the same either way.
Will switching water retailer save me money?
It can, but savings tend to be smaller than with energy because the wholesale part of the bill is the same whichever retailer you use. Better service, accurate billing and moving off a default tariff are often the main benefits. Prices vary by region, usage and meter size.
What is surface water drainage on my bill?
It is the charge for taking rainwater from your roofs and hard surfaces into public sewers. It may be charged through a standing charge, rateable value, volumetric rate or site area. If none of your rainwater reaches a public sewer, you may be able to claim a rebate.
Is VAT charged on business water?
Water supply is zero-rated for most businesses, but industrial users in SIC 1980 Divisions 1 to 5 pay VAT at the standard rate. Sewerage services are zero-rated for everyone. Check your retailer has your correct business activity on record.
Why is my business water bill based on rateable value?
If your premises has no meter, you are usually charged on rateable value plus a standing charge. Rateable values were last updated in 1990, so they may not reflect how much water you actually use. A meter may be worth considering if your use is low.
Does the open water market apply in Northern Ireland?
No. NI Water sets the charges and bills non-domestic customers directly. Businesses there should focus on accurate meter reads, leaks and checking their charges.
Get a quote
If you would like to see how your current water charges compare, we can check your bill and look at retailers on our panel. You can request a quote online, call us on 03333 601010 or contact our team. We are open Monday to Friday, 9am to 5pm.