Climate Change Levy (CCL)

October 23rd, 2019
Climate

The CCL is a tax applied to energy bills of non-domestic users. The aim and intention of the tax is to incentivise better energy efficiency.

The Climate Change Levy was introduced in April of 2001, the architects of the proposal forecasted that greenhouse emissions could be cut by 2.5 million tonnes as a result of the new tax by 2010. The tax is applied to most users except those that are listed below.

In the budget of July 2015 the Chancellor of the Exchequer decided to remove the exemption of energy generated from green sources. As result non-domestic users will see an added tax on their bills. The move could see the Exchequer collect an extra £450 million per year.

Rates

The rates at which CCL is charged is set below, but will increase each year from the beginning of the financial year (1st of April).

Electricity 0.554p/kwh

Gas 0.193p/kwh

LPG (and other hydrocarbon fuels) 1.24p/kg

Any other “taxable commodity” 1.429 p/kg

Exclusions and Reductions

  1. Exclusions from CCL

Bills where VAT is charged at 5% are automatically excluded from a CCL charge, and there are 3 categories where VAT will be charged at 5% and will be excluded from CCL.

  1. Properties which are used for residential purposes including domestic tenants, student accommodation and care homes.
  2. Charities that use energy for non-commercial use
  3. Businesses that use less than 1,000 kWh of electricity per month over a billing cycle, and if its gas than no more than 4,397 kWh per month

A VAT Certificate may need to be completed to full under the exclusion bracket

  1. Reduction on CCL

If the business is an intensive user of business energy it may be eligible for a reduction of CCL which could be as much as 90% for electricity and up to a 65% discount on gas fuel.  To get a reduction on CCL, you will need to contact the HMRC to make an application.

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