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Climate Change Levy Explained

The Climate Change Levy (CCL) is an environmental tax imposed by the government that charges on the electricity and gas used by your business. It is intended to help your business function in a more environmentally friendly way and encourage you to be more energy-efficient to help reduce the UK’s overall greenhouse gas emissions.

The CCL is charged at a set price for every unit of energy that your business uses and is either paid at the main rate or the carbon price support rate. It applies to most business energy consumers but there are some exceptions which will be explained below.

CCL rates can form up to 15% of your energy bill. Energy can be an expensive business so to make sure you are getting the most out of your energy deal, use our website or call us on 0800 802 1511 and we can help you compare business energy. We can offer you all kinds of business energy deals that will suit the needs of your business.

In this
guide:

Main Rates

CCL is paid at the main rate on electricity, gas and solid fuels (coal, lignite, coke and petroleum coke).

It applies to your company if your business operates in one of the following sectors:

  • Industrial
  • Commercial
  • Agricultural
  • Public services

How much will I pay?

CCL rises with inflation so the set price for each unit is likely to rise each year.

Gas Electricity
1st April 2018 to 31st March 2019 0.203p/kWh 0.583p/kWh
1st April 2019 to 31st March 2020 0.339p/kWh 0.847p/kWh

Is my business exempt from paying the main rates of CCL?

If you are a domestic energy user or a charity engaged in non-commercial activities then you won’t have to pay the levy.

If you have a small business with low usage you may also be exempt from the tax. Small amounts of energy are treated as domestic use so if your business consumes less than 12,000kWh per year you will not have to pay the levy.

Is the energy I use exempt from the main rates of CCL?

The way you use your fuel can affect whether you are required to pay the levy. Electricity, gas and solid fuel usage are exempt if:

  • The energy is not used in the UK
  • Supplies are intended for resale (this doesn’t apply to gas or electricity)
  • It is used in some forms of transport
  • The energy is used to produce electricity in a generating station with a capacity of 2MW or more
  • It is not used as a fuel for your business
  • The energy is supplied to or from some CHP schemes which are registered under the CHP quality assurance programme
  • Your fuel is oil-based
  • Low-value solid fuel (worth less than £15 per tonne) or waste are used as an energy source

I think one of these exemptions applies to my business, what must I do now?

You need to give your energy supplier a certificate which proves that one of these exemptions applies to your business. The certificate required is available here.

Can I get a reduction in the main rate of the CCL?

If your business is energy-intensive and is part of the Climate Change Agreement (CCA) with the Environment Agency then you are eligible for a reduction on the tax you pay. These businesses can get a 90% reduction for electricity and a 65% reduction on gas, coal, liquefied petroleum gas and other solid fuels.

Industries with high energy demands often involve the use of materials such as aluminium, iron and steel, and the production of leather, lead, zinc, tin, paper and copper. If your business is involved in energy-intensive processes such as these then it is worth finding out if you are eligible to join the CCA.

The CCA is an agreement to reduce the energy usage and carbon dioxide emissions of your business. If you want to find out if your business is eligible to enter into the CCA, you can find out here.

Carbon Price Support Rates (CPS)

CPS rates are paid by combined heat and power (CHP) stations and electricity generating stations. This is designed to encourage companies to use low carbon technology to produce electricity. CPS rates are paid on gas, liquefied petroleum gas and coal and other solid fossil fuels.

Your business may also be exempt from CPS rates. If you own a small generator, a stand-by generator or a generating station in Northern Ireland then you are not required to pay the CPS rate.

How is CCL charged?

CCL will be charged by your supplier and then paid to HM Revenue and Customs. The CCL charge will not be included in the price per unit you have agreed with your supplier, it will probably be listed as a separate item on your energy bill.

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