What Do the Changes to CCL Rates Between 2022 and 2024 Mean for You?

In an attempt to tackle the growing issue of climate change, the government provides a number of environmental tax and relief schemes designed to encourage businesses to adjust their operations to become more environmentally friendly.

Just one of these schemes is the Climate Change Levy (CCL). In this guide, we’ll be taking a look at exactly what CCL is and what it means for your business.

What is the Climate Change Levy (CCL)?

The Climate Change Levy (CCL) is a government-imposed environmental tax charged on the energy that businesses and non-domestic operations use. The scheme is designed to encourage business owners to adjust the way in which they operate in order to become more energy efficient and reduce their overall emissions.

The levy applies to businesses within the industrial, public services, commercial and agricultural sectors, charging them on ‘taxable commodities’ for heating, lighting and other power usage.

There are two rates at which the tax can be paid: main rate or carbon price support (CPS) rate.

Main Rates

Businesses within the industrial, public services, commercial and agricultural sectors will be charged the Climate Change Levy at the main rate on electricity, gas and solid fuel (e.g. coal). The individual rates for your business will be listed on your business'’ gas or electricity bill.

However, there are some businesses which are excluded from paying main CCL rates such as charities which are engaged in non-commercial activities and businesses that consume less energy than the de minimis limit (less than 33kWH electricity and/or 145kWh gas each day)

Carbon Price Support (CPS) Rates

You will be required to pay the Carbon Price Support rate if you own generating stations or operate combined heat and power stations. The rate varies depending on the comedy- kilowatt-hours for gas and electricity and kilograms for all other taxable commodities.

On the other hand, if you’re generating your own energy and make money from the Feed-in Tariff, you are unlikely to have to pay the levy as you will usually be classed as a small generator.

How is the Climate Change Levy (CCL) Charged?

It is the responsibility of business energy suppliers to charge the appropriate CCL as they are the ones supplying the taxable commodities (this can usually be found on your monthly gas or electricity invoices). Once this has been collected, the supplier will then pass this onto HMRC.

It is important to note that as a business you must first register for the Climate Change Levy. Without registering, or failing to pay the levy, you will be charged a penalty fee of £250 for each instance.

Climate Change Levy Rates

See the latest CCL rate per kilowatt-hour on natural gas and electricity below:

Paying a Reduced Rate on CCL

In order to pay a reduced main rate on CCL charges, businesses which consume high quantities of energy must enter into a climate change agreement (CCA) with the Environment Agency. A CCA is a voluntary agreement designed to reduce energy use and CO2 emissions.

This, of course, means that you’ll actually have to improve your business’ energy efficiency and lower your average energy consumption in order to benefit from a reduced rate. The agreement states that you will have to measure and report your business’ energy use and CO2 emissions against targets over four two-year terms.

Businesses who enter the agreement will receive a reduction of 90% in the CCL rate paid on electricity bills and a 65% reduction on other fuels. You can find out if your business is eligible to sign up to a CCA here.

So long as your business continues to meet its targets at the end of each term, you will continue to benefit from the reduced climate change levy. Not sure how to meet your targets? Why not check out our top energy saving tips.