In a drive to increase the overall energy efficiency of businesses in the UK and to reduce greenhouse gas emissions, the government introduced a levy known as the Climate Change Levy.

What is the Climate Change Levy?

To put it simply, the Climate Change Levy is a tax on the amount of energy a business in industry, commerce and the public sector uses.

The tax is added to energy bills before VAT and often appears as a separate item.

All money collected through the Climate Change Levy is  recycled back to businesses via a 0.3 per cent cut in employers’ national insurance contributions and via support towards energy efficiency and carbon-reduction equipment.

Current Climate Change Levy rates

CommodityRate from 1st April 2014Rate from 1st April 2015
Electricity 0.541p p/kWh 0.554p p/kWh
Gas 0.188p p/kWh 0.193p p/kWh
Petroleum gas or other gaseous hydrocarbon in liquid state 1.210 p/kg 1.240 p/kg
Any other taxable commodity 1.476p p/kg 1.512p p/kg

Note: facilities taking part in the Climate Change Agreements Scheme with the Department of Energy and Climate Change are eligible to pay a reduced rate of CCL – from 10%.

What businesses are affected by the Climate Change Levy?

The Climate Change Levy applies to all energy supplies to the industrial, commercial, agricultural and public service sectors. It does not, however, apply to the following:

  • Fuel consumed for producing other forms of energy (electricity, for example) or for non-energy purposes.
  • Energy consumed by registered charities for non-business use.
  • Fuel consumed by domestic consumers (households) or businesses in the transport sector.
  • Deminimus energy consumed by very small businesses.

What energy is taxable under the Climate Change Levy?

A range of energies are taxable under the Climate Change Levy – including electricity, natural gas, coal, lignite, petroleum and hydrocarbon gas (as liquids). Commodities that are exempt are:

  • Electricity generated from solar and wind power (and other new renewable energy sources).
  • Oils which are already subject to excise duty.
  • Fuels used by good quality CHP (combined heat and power) schemes.
  • Fuel used as a feedstock.
  • Electricity used for certain process – such as the chlor-alkali process, or primary aluminium smelting.

Climate Change Levy Benefits?

As a business, you may be required to pay tax under the CCL – so it’s worth having an understanding of why you have to do this, and what benefit it is having.

The Climate Change Levy has already, and is continuing to play a huge role in helping the UK reach its targets for reducing the level of greenhouse gases we, as a nation, emit. The overall aim of the Levy is to promote energy efficiency and encourage investments in new types of energy.

How can Apollo Energy help your business with the Climate Change Levy?

Ensuring your business is paying the correct amount of Climate Change Levy tax can be a daunting task – and can easily become a drain on your company’s time and resources.

Apollo Energy's in-house energy experts are at hand to help your business meet its CCL requirements.

We can help you:

  • Complete and submit the relevant Climate Change Levy documentation – PP10 (supporting analysis of energy use) and PP11 (supplier liability for the CCL).
  • Monitor the energy your business is using ensuring you are paying the correct amount of CCL.
  • Submit a VAT declaration if your company qualifies for reduced VAT and is therefore exempt from Climate Change Levy.
  • Ensure your billed rates are correct if green energy is purchased.

Find out more about the Climate Change Levy

If you’d like more information about the CCL, and to talk about how Apollo Energy can help your business, speak to one of our energy consultants today. Alternatively, you can visit the HMRC's page here.