Climate Change Levy (CCL)

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The climate change levy and energy efficiency

To ease the impacts of climate change, the UK government provides several environmental tax and relief schemes encouraging business to take more environmentally friendly approaches across their operations. 

Introduced in April 2001, the Climate Change Levy (CCL) is one of these measures. We’ll walk through what it entails below.

The Climate Change Levy: An overview

The Climate Change Levy (CCL) is an environmental tax charged on the energy that businesses use. A means of encouraging businesses to be more energy efficient in how they operate, the CCL aims to reduce the overall emissions that businesses produce. 

In simple terms, the more energy efficient your business is, and the less carbon-emitting energy you use, the less CCL you’ll pay.

So who does it apply to? Any business in the industrial, public services, commercial and agricultural sectors is subject to the tax, which is charged on ‘taxable communities’ for heating, lighting and power purposes. It is not charged on road fuel and other oils that are already subject to excise duty. 

Your business must register for the Climate Change Levy. If you do not pay the Climate Change Levy – or you do not register – you'll have to pay a penalty of £250 for each instance.

How the Climate Change Levy rates work

CCL is paid at either the main rate or Carbon Price Support (CPS) rate, these differ in the following ways:

Main rates

Any business in the industrial, public services, commercial and agricultural sectors will be charged CCL at the main rate on electricity, gas and solid fuel use. You can find these main rates listed on your business gas or electricity bill.

Carbon Price Support rates

If you own generating stations or you operate combined heat and power stations, then you’ll be required to pay the Carbon Price Support rate. This levy rate varies for each commodity: kilowatt-hours for gas and electricity, and kilograms for all other taxable commodities.

That said, if you generate your own energy and make money through the Feed-in Tariff, it’s unlikely you will have to pay the levy since you’ll be classed as a small generator.

Current Climate Change Levy rates

For the latest CCL rates per kilowatt-hour on natural gas and electricity, please refer to the table below…

Time Period

Natural Gas

Electricity

1st April 2020 to 31st March 2021

0.406p/kWh

0.811p/kWh 

1st April 2021 to 31st March 2022

0.465p/kWh

 

0.775p/kWh

1st April 2022 to 31st March 2023

0.568p/kWh

0.775p/kWh

1st April 2023 to 31st March 2024

0.672p/kWh

0.775p/kWh

1st April 2024 to 31st March 2025

0.775p/kWh

 

0.775p/kWh

For the latest CCL percentage discount for holders of a climate change agreement for gas and electricity, please refer to the table below.

Time Period

Natural Gas

Electricity

1st April 2020 to 31st March 2021

81%

92%

1st April 2021 to 31st March 2022

83%

92%

1st April 2022 to 31st March 2023

86%

92%

1st April 2023 to 31st March 2024

88%

92%

1st April 2024 to 31st March 2025

89%

92%

Paying a reduced rate on the CCL

If your business is looking to pay a reduced main rate on CCL charges, you’ll have to enter into a Climate Change Agreement (CCA) with the Environmental Agency. This is a voluntary agreement that aims to reduce your energy use and CO2 emissions.

However, there is a trade-off. Paying a reduced rate means you’ll be required to improve your business’ energy efficiency and lower your average energy consumption. You’ll also have to measure and report your business’ energy use and carbon dioxide emissions against targets set over for two-year terms.

Businesses bound by a CCA will receive a reduction of 90% in the CCL rate paid on electricity bills, and a 65% reduction on all other fuels. To check if your business is eligible for a CCA, head here.

Should you meet the targets set at the end of each term, you’ll then continue to receive the Climate Change Levy discount.

For more information and advice on how you can improve your business’ energy efficiency, take a look at our energy insights here.

Climate Change Levy Exemptions

Your business may be exempt from paying the Climate Change Levy if you meet the following requirements:

  • Your business uses small amounts of energy – less than 33kWh electricity and/or 145kWh gas a day
  • You’re a domestic energy user, i.e., energy is used in homes, schools, caravans and self-catering accommodation
  • You’re a charity involved with non-commercial activities

You can find guidance on what constitutes charitable or domestic use in our VAT & CCL Guidance document here.

To claim for an exemption on paying the Climate Change Levy, you'll need to complete the Government's Climate Change Levy supplier certificate (PP11) and return it to our Customer Services team on enquiries@sefe-energy.com

Even if you're not exempt, you may still be able to pay a reduced rate by making energy-efficient changes to your business. The best way to do this is to sign a Climate Change Agreement that we mentioned above.

Claiming back on the Climate Change Levy

If you've overpaid on your Climate Change Levy, then it's possible to claim a tax credit. Head to the Gov.uk page here for more information as well as the necessary forms you'll need to fill in.

Common Questions Climate Change Levy FAQs

Our FAQs provide answers to commonly asked questions about who we are, what we do, our products, and how we work.

Do I pay CCL charges if I am VAT exempt?

If you are exempt on VAT because you qualify for domestic rates or are a charitable organisation, then no CCL will be charged.

See our exemption guidance notes or visit the GOV.UK page on environmental taxes, reliefs and schemes for businesses for more details.

For more information on VAT, visit our Help & Support section here.

How do I claim my CCL exemption?

Some customers are entitled to full/partial relief from the CCL charge. If you hold a valid exemption from this charge, SEFE Energy will apply this to your account.

If this has not been applied to your account, please submit a copy of your valid certificate to enquiries@sefe-energy.com and we will update your account to reflect your exemption. Your account will then be reconciled within the next invoice.

You can find supporting documents on the Government’s website here:

Read more about CCL exemptions here.

What are the current Climate Change Levy (CCL) Rates?
Where can I find Climate Change Levy (CCL) charges on my invoice?
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