Climate Change Levy is a levy which has been applied to the cost of energy consumed for lighting, heating and power by businesses and industry since April 2001.
The levy was introduced following a legally binding commitment made by the government at Kyoto in 1997 to reduce emissions of greenhouses gases by 12.5 per cent below the 1990 levels between 2008 and 2012. The UK agreed to set itself a more challenging role in respect of carbon dioxide emissions, this being to reduce these emissions by 20 per cent by 2010.
What Commodities are Taxable?
The following commodities will have the levy applied:
- Electricity
- Gas supplied by a Gas Utility
- Petroleum and Hydrocarbon Gas in a Liquid State
- Coal and Lignite
- Coke, and Semi-Coke of Coal or Lignite
- Petroleum Coke
Who Will be Exempt from the Levy?
- Domestic Customers
- Some Communal Residential Accomodation
- Certain Education Establishments
- Specific Health Care Premises
- Good Quality CHP Schemes
- Energy Supplied from a Qualifying Renewable Source
Who Will Benefit from Reduced Levy Taxation?
The following industries:
- Horticultural producers
- Aluminium
- Cement
- Ceramics
- Chemicals
- Foundries
- Non-Ferrous Metals
- Paper
- Steel
The reductions vary and can be as much as up to 80% relief.
Will There be any Benefits to Offset the Levy?
The government announced that with effect from 1st April 2008, in conjunction with the CCL, Employers National Insurance Contributions will reduce by 0.3%.
It is therefore possible to benefit financially from the levy if you have a business with low energy consumption and a high staffing level.
What Will the Levy Rates Be?
Electricity |
0.456 pence per kWh |
Gas |
0.159 pence per kWh |
Petroleum Gas or Other Gaseous Hydrocarbon supplied in a Liquid State |
1.018 pence per kilogram |
Any Other Taxable Commodity |
1.242 pence per kilogram |
These taxes will on average increase each of your energy bills by between 10% and 15%.