Business tax – guidance

Climate Change Levy: application, rates and exemptions

Find out if you need to register for Climate Change Levy and the rate you should pay.

Overview

Climate Change Levy (CCL) is made up of 2 rates.

You need to register for and pay the main rates of CCL if you supply business customers with:

You need to register for and pay the Carbon Price Support (CPS) rates of CCL if you use fossil fuels (excluding oil) to generate electricity.

You follow the same registration and payment processes for both the main CCL rates and the CPS rates.

Self Supply

You must also account for CCL at the main rate if the energy your business supplies is consumed by your business. It should be treated the same as supplying a third party consumer.

Most usage by a business that also supplies the energy will be classed as self-supply, but there are some self-supply exceptions.

Non-UK residents

If you’re not based in the UK and are making taxable supplies you must appoint a UK-based tax representative.

The representative is responsible for making tax returns and keeping tax records.

There are no rules about who can act as a tax representative. Tax representatives are jointly and severally liable with the principal for the main rates of CCL.

Importers

If you’re a UK resident that imports taxable commodities and supplies them to end-users, or are yourself an end-user, you need to register for CCL. If you’re not resident in the UK, and are not a utility, the person you supply should register.

You don’t need to register if you import supplies but don’t use them yourself, and only sell them to wholesalers or retailers (not end users). You do need to get notifications from customers that state they intend to sell on the commodities.

Exemptions from the main rate of CCL

Supplies that are exempt from the main rate of CCL are supplies:

  • not for burning or consumption in the UK (exports)
  • of liquefied petroleum gas and solid fuel intended for re-sale
  • used in some forms of transport
  • to producers of taxable commodities other than electricity
  • to electricity producers (other than combined heat and power (CHP) stations, small generating stations and stand-by generating stations)
  • to CHP stations
  • by small generating stations (other than CHPs) used to generate any electricity that’s not self-supplied
  • not used as fuel
  • electricity generated from renewable sources
  • of electricity from Good Quality CHP stations in some circumstances
  • for use in metallurgical and mineralogical processes

If you think you fall into one of these categories, you should read the detailed guidance on supplies that are exempt from CCL.

Main rates

The main rates of CCL are charged at a specific rate per unit of energy. The rate varies for each commodity.

There are reduced rates for participants of the climate change agreement (CCA) scheme. This scheme is for energy intensive businesses that have entered into a climate change agreement with the Environment Agency.

Rate from 1 April 2015

Taxable commodity supplied Unit Rate Reduction on main commodity rate for holders of a CCA
Electricity per kWh £0.00554 10%
Gas per kWh £0.00193 35%
LPG and other gaseous hydrocarbons in a liquid state per kilogram* (use a conversion rate of 2,000 litres per tonne litres of butane and propane to kilograms) £0.01240 35%
Any other taxable commodity per kilogram £0.01512 35%

Rates from 1 April 2014 to 31 March 2015

Taxable commodity supplied Unit Rate Reduction on main commodity rate for holders of a CCA
Electricity per kWh £0.00541 10%
Gas per kWh £0.00188 35%
LPG and other gaseous hydrocarbons in a liquid state per kilogram* (use a conversion rate of 2,000 litres per tonne litres of butane and propane to kilograms) £0.01210 35%
Any other taxable commodity per kilogram £0.01476 35%

Carbon Price Support rates

You must pay the CPS rate if you generate electricity using:

  • gas of a kind supplied by a gas utility
  • LPG
  • coal and other solid fossil fuels (petroleum coke, lignite, coke and semi-coke of coal or lignite)

You become liable for the CPS rates when:

  • gas passes through the meter at the generating station
  • LPG, coal and other solid fossil fuels are delivered through the entrance gate at the generating station

When you submit your return you must declare CCL, including the CPS rates of CCL, and keep normal commercial accounting records to prove your declarations.

Fuel Rates 1 April 2014 to 31 March 2015 Rates 1 April 2015 to 31 March 2016 Rates 1 April 2016 to 31 March 2017
Gas (£ per kilowatt hour) 0.00175 0.00334 0.00331
LPG (£ per kilogram) 0.02822 0.05307 0.05280
Coal and other solid fossil fuels (£ per gigajoule on gross calorific value) 0.81906 1.56860 1.54790