Climate change levy
Climate change levy (CCL) is designed to encourage businesses to reduce their energy consumption or use energy from renewable sources.
Generate your own renewable energy
Your business can also reduce costs through minimising your energy use.
The CCL applies to supplies of the following:
- electricity
- natural gas supplied by a gas utility
- petroleum and hydrocarbon gas in a liquid state (LPG)
- solid fuels, i.e. coal, lignite, coke - and semi-coke - of coal or lignite, and petroleum coke.
Users of energy from these sources must pay the tax. The levy is imposed at the time of supply, so it will already be included in your energy bills. Suppliers of these services collect the tax. Note that supplies for domestic use and to charity users for non-business purposes are excluded. Small quantities of fuel and power (de minimis) can be treated as being domestic use even when they are supplied to a business.
Rates
The levy is charged at an exact rate per unit of energy. The rates for 1 April 2013 are as follows:
| Commodity | Rate from 1 April 2020 | Rate from 1 April 2021 | Rate from 1 April 2022 | Rate from 1 April 2023 | Rate from 1 April 2024 | Reduced rate of CCL for CCA holders |
|---|---|---|---|---|---|---|
| Electricity | 0.811 pence per kilowatt hour | 0.775 pence per kilowatt hour | 0.775 pence per kilowatt hour | 0.775 pence per Kilowatt hour | 0.775 pence per Kilowatt hour | 8% from 2022 |
| Gas supplied by a gas utility or any gas supplied in a gaseous state that is of a kind supplied by a gas utility. | 0.406 pence per kilowatt hour | 0.465 pence per kilowatt hour | 0.568 pence per kilowatt hour | 0.672 pence per Kilowatt hour | 0.775 pence per Kilowatt hour | 14% from 2022 |
|
Any petroleum gas, or other gaseous hydrocarbon, supplied in a liquid state. LPG |
2.175 pence per kilogram | 2.175 pence per kilogram | 2.175 pence per kilogram | 2.175 pence per kilogram | 2.175 pence per kilogram | 23% after 2022 |
| Any other taxable commodity. | 3.174 pence per kilogram | 3.640 pence per kilogram | 4.449 pence per kilogram | 5.258 pence per kilogram | 6.064 pence per kilogram |
12% for 2022 11%for 2024 |
Reduced rates and exemptions
CCL has a reduced rate and a range of exemptions.
If your type of business is deemed as energy intensive - such as aluminium, chemicals and food - the reduced rate could apply and you may get a 90 per cent reduction if you join an agreement to meet energy-efficiency or carbon-saving targets negotiated by your trade body and the government. To qualify, you must meet binding targets - reviewed every two years - for reducing energy use.
To check whether your business is eligible and how to join a scheme, see the page in this guideline: Climate change agreements.
The following are exempt from the levy:
- supplies not for burning or consuming in the UK
- supplies to and from certain combined heat and power schemes
- electricity from renewable sources
- supplies used to produce taxable commodities other than electricity
- supplies to electricity producers
- supplies for a non-fuel use.