Climate Change Levy (CCL)

Summary Fact sheet

As of April 2001 the government introduced the Climate Change Levy (CCL). CCL is a government-imposed levy designed to encourage businesses to be more energy efficient to reduce greenhouse gas emissions. It was introduced in 2001 to ensure the UK’s environmental targets are met following the 1997 Kyoto Protocol. 

Electricity and gas suppliers collect the levy on behalf of the government. This new tax affects almost every business in the UK.

This document has been compiled by U-OL order to save our customers time. We have summarised the information published by HM Customs and Excise so that you may quickly clarify the effect of the tax on your business.

What is the purpose of the levy?

The levy is hoped to play a major role in helping the UK meet it’s targets for reducing greenhouse gas emissions. It is intended to promote energy efficiency and stimulate investment in energy saving equipment. The UK’s goal is to reduce carbon dioxide emissions by 20% by the year 2010.

What energy products are liable to the levy?

Electricity, gas, LPG, coal, coke and similar products. These are described as being ’taxable commodities’.

But Mineral Oils (Diesel, red diesel, petrol, paraffin), household refuse, waste paper, sewage gas, landfill gas and chicken droppings are not taxable.

In 2006, the government announced that CCL rates will increase in line with inflation for the 2007 – 2008 charging period. This change aims to further encourage UK businesses to reduce their carbon emissions.

What are the levy rates?

The amount of levy is based on the quantity of fuel supplied (not on it’s value as for VAT).

    Electricity  = 0.47 pence per kilowatt hour as of April 1st, 2009 (was 0.456);

    Natural gas  = 0.154 pence per kilowatt hour as of April 1st, 2007 (was 0.15);

    Solid fuel e.g. coal & coke = 1.17 pence per kilogram; and

    Liquid petroleum gas for heating = 0.96 pence per kilogram.

The levy is a sticking tax and unlike VAT it cannot be reclaimed (it is also itself subject to VAT).

Exclusions

Energy supplies for domestic consumption and non-business use by charities are liable to be taxed at the reduced rate of VAT (currently 5%). These particular uses are excluded from the Levy and your supplier will not add a charge for the levy to your bill.

Electricity: Metered supplies of not more than 33kWh per day over the period of the bill are automatically treated as domestic supplies even if they are for a business premises.

Gas: Metered supplies of not more than 145 kWh per day over the period of the bill are automatically treated as domestic supplies even if they are for a business premises.

If you are not being charged VAT at the 5% rate and believe you qualify for this lower rate (and therefore CCL levy exemption) you must ask your supplier to send you a certificate in order that you can substantiate your claims.

WHAT ARE MY OPTIONS FOR AVOIDING CCL CHARGES?

1 - Apply for CCL Exemption.

You may be eligible for CCL Exemption. The supplier must receive a CCL Exemption Certificate for each of your qualifying sites at least 14 calendar days before your earliest supply start date. Please note that HM Revenue & Customs will not allow us to backdate any CCL exemptions.

2 - Purchase a levy-exempt electricity contract.

If you have signed a renewable electricity contract you will be exempt from the levy for the energy consumed on the sites covered by the contract. Find out more from your supplier or consultant (Energy from Sustainable Sources).

HOW CAN I REDUCE MY CARBON EMISSIONS?

A wide range of products and services can help you save energy:

• online energy monitoring tools
• Energy Efficiency Toolkit – a practical guide designed to taking the hard work out of saving energy
• Performance Partnerships – electricity contracts with built-in energy and cost savings
• Advanced Efficiency Programmes – a business case and action plan, prepared by engineers, to realise further efficiencies for energy intensive sites

National Insurance Contributions reduction and Enhanced Capital Allowances (ECAs)

There is a 0.3 percentage point cut in the rates of employers NICs for the financial year 2001-2002 e.g. from 12.2% to 11.9%. Any business that employs staff and makes NIC contributions will benefit regardless of whether they pay the CCL levy or not. Similarly, those businesses investing in any eligible energy saving technology will benefit from ECA’s.

For information on ECA’s available to investors in energy saving technology visit  http://www.eca.gov.uk 

or if this is not possible Tel. 0800 585 794

Reduced Rates

Some energy intensive business sectors are eligible for a reduced rate of levy that is 20% of the normal rate and some horticulture producers will receive a 50% reduction. Clearly most businesses are not eligible.  If you are in any doubt you must contact your local trade association to discover if they already have agreements with the DETR. Alternatively you can contact the Customs and Excise Climate Change Levy Advice Line: Tel. 0161 261 7259 

Energy Efficiency Advice: Tel. 0800 585 794or  www.energy-efficiency.gov.uk

Customs and Excise National Advice Service:

Tel. 0845 010 9000

	CCL (DEFRA web site)
	Commercial