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FAQ'sClimate Change Levy

Climate Change Levy

The Climate Change Levy (CCL) is a tax on energy delivered to non-domestic users in the United Kingdom. Its aim is to provide an incentive to increase energy efficiency and to reduce carbon emissions, however there have been ongoing calls to replace it with a proper carbon tax.  Introduced on April 1st, 2001 under the Finance Act 2000 it was forecast to cut annual emissions by 2.5 million tonnes by 2010, and forms part of the UK’s Climate Change Programme. The levy applies to most energy users, with the notable exceptions of those in the domestic and transport sectors. Electricity generated from new renewables and approved cogeneration schemes is not taxed although electricity from nuclear energy is taxed even though it causes no direct carbon emissions.

Taxable Commodity

From the 1st April 2014 the Government increased the Climate Change Levy (CCL). This means that for any energy used where CCL applies, it will be charged at the new rate from this date onwards, and on the previous rate prior to this date.

The new CCL rates are:

  • 0.541p/kWh for electricity
  • 0.188p/kWh for gas

The 2013 CCL rates are:

  • 0.524p/kWh for electricity
  • 0.182p/kWh for gas

From the 1st  April customers will see the new charges for CCL on their bill for their electricity and gas consumption.   If a customer’s bill is for a period that crosses the CCL rate change, both the old and new rate will be shown and they’ll be charged the correct rate for the date the energy was used.

Further Advice

HM Revenue and Customs is responsible for publishing the active CCL rates and planed ammendments to the rates.  A general guide to Climate Change Levy is available at www.hmrc.gov.uk (click on the ‘Environmental taxes’section of ‘Excise and other’).  The CCL is added to energy bills before VAT and, although there is no legal requirement to itemise it, it often appears as a separate item on bills.