The Climate Change Levy (CCL) is a government-imposed tax on business energy use, charged at a set price per every unit (kWh) of gas or electricity a business consumes.
It is payable on energy used by the vast majority of non-domestic energy consumers, and is designed to encourage a reduction in carbon dioxide emissions in an effort to improve the UK’s energy efficiency.
CCL rates rise with inflation and can account for up to 15% of a business’s energy bill. The levy is not factored into the unit costs or standing charge set by your supplier.
The forms of energy covered by the levy are:
From April 2015 until March 2016, the main rates of the levy are as follows:
The main rates of CCL are applicable to your business if it belongs to any of these sectors:
You must also pay CCL at the main rate if the energy your business produces is consumed by your business. It should be treated the same as supplying a third party consumer, and is classed as self-supply. However, if the energy is generated from renewable sources or if your business buys renewable energy - or implements other energy saving measures such as Combined Heat & Power systems - you may be eligible for a Levy Exemption Certificate.
For more information on renewable energy options for your business, click here.
The main rates of the levy are not applicable to businesses in the following categories:
Electricity, gas and solid fuel are normally exempt from the main rates of CCL if:
When the climate change levy was introduced, the position of energy-intensive industries was considered, and an agreement to provide discounts from the levy was made – the Climate Change Agreement (CCA). The CCA outlines that certain sectors with particularly high energy demands should qualify for significant discounts on the CCL – providing they make commitments to increase energy efficiency and reduce carbon dioxide (CO2) emissions.
Businesses that are part of the CCA are eligible to claim a discount on the CCL charged on their energy bills – up to a 90% reduction for electricity and a 65% reduction for gas, liquefied petroleum gas (LPG), coal and other solid fuel.
Some examples of energy-intensive industries are those that heavily involve the use of the following materials: