Make sure you fit a meter outside just after the outside tap, or just after the tap that you get your supply from. That way when you need to claim back the money in tax you know how much water you have used.
Using the "for every litre you use and then double" it is fine, if you don't want an accurate reading. Using that method wouldn't show you what water you used when flushing and also after a year of data you can apply to your water board for an abatement because your not sending water back to the sewer. Mine was £111 for the year.
You cannot get an abatement without a meter.
Also all the water that you use for watering garden, cleaning the car etc can all be included in your abatement