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The Climate Change Levy: What Do Business Owners Need to Know?
Grab your latest business gas bill and take a look – you may notice there is a Climate Change Levy (CCL) on there that you might have not noticed before.
You may also not be aware that there is a way you can reduce these charges too.
What is the Climate Change Levy (CCL)?
The Climate Change Levy (CCL) is an environmental tax that has been placed on commercial energy use in the UK. It is a tax that is additional to VAT and which certain businesses will have to pay on their business gas rates.
Why do business have to pay the Climate Change Levy (CCL)?
The Government in the UK the CCL as part of a wider array of legislation aimed at reducing greenhouse gas emissions – but it is an energy tax rather than a carbon tax. Alongside the CCL is the Climate Change Agreement (CCA) which enables businesses to get access to reduced rates by committing to improve their energy consumption.
The UK Government introduced both pieces of this legislation to help motivate businesses to become more energy-efficient, and to help them meet their 2050 target of net-zero greenhouse gas emissions.
Which businesses will have to pay the CCL?
Most businesses will have to pay the CCL, although there are some exceptions:
• Business that have charitable status and are engaged in non-commercial activities
• Small businesses who use less than 1000 kWh of electricity or 4,397 kWh gas per month
• Business that is supplied via a domestic energy contract
You will also be exempt from paying the CCL if:
• Your business is not based in the UK
• You are not going to use the energy as fuel
• You are not going to use the energy to create electricity
• Your energy is being supplied from certain combined heat and power schemes
How much will my business have to pay?
The amount business have to pay for the CCL is set by the Government and tends to vary from year to year. However, the rate will be the same across all business energy suppliers.
The current CCL rate for 2020/2021 is:
• £0.00811 per kWh for business electricity
• £0.00406 per kWh for business gas
The more energy you use, the more CCL you will pay – just like VAT.
How do I pay the CCL?
You must register to pay the CCL – if you don’t you will end up paying a penalty. Your business gas supplier will then calculate how much the CCL is for your company, and then they will apply it to your bill. They then pay the HMRC on your behalf.
At D-ENERGi, our team of experts can help you to find the best business gas supplier with the cheapest business energy deal to meet the needs of your business.