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This publication is available at https://www.gov.uk/government/publications/climate-change-levy-exemption-for-mineralogical-and-metallurgical-processes/climate-change-levy-exemption-for-energy-used-in-mineralogical-and-metallurgical-processes
Who is likely to be affected
Businesses entitled to claim the exemption from the Climate Change Levy (CCL) on the energy they use in mineralogical and metallurgical processes.
General description of the measure
This measure amends the definition of mineralogical processes so that the exemption, for energy used in those processes, remains operable following the UK’s departure from the EU and clarifies that a landlord can claim the exemption for both mineralogical and metallurgical processes on behalf of a tenant.
The measure maintains the current scope of the exemption on mineralogical processes following the UK’s departure from the EU and, in response to representations from stakeholders, to ensure that businesses entitled to the exemption for energy used in mineralogical and metallurgical processes are not precluded from benefiting because they are tenants.
Background to the measure
The exemption from CCL for energy used in mineralogical and metallurgical processes was introduced on 1 April 2014 to help reduce costs of businesses in these sectors, which are some of the most energy intensive as well as being subject to high levels of international competition.
Mineralogical processes are defined in legislation by reference to the Energy Taxation Directive whereas metallurgical processes are defined by reference to NACE codes (an internationally recognised system for classifying economic activity).
The exemption for both processes refers to energy (in practice mainly gas and electricity) being supplied ‘to a person’ and used ‘by a person’. This has the unintended consequence of excluding from the exemption tenanted businesses that carry out mineralogical and metallurgical processes, because they receive their energy via a landlord rather than directly from an energy utility.
Draft legislation was published for consultation on 6 July 2018.
This measure will come into effect following Royal Assent to Finance Bill 2018-19.
The exemption is set out in paragraph 12(A) of Schedule 6 to the Finance Act 2000.
Legislation will be introduced in Finance Bill 2018-19 to amend paragraph 12(A) to redefine mineralogical processes by reference to NACE codes and delete the words ‘to a person’ and ‘by a person’ to make clear that the landlord is entitled to claim the exemption on behalf of a tenant.
Summary of impacts
Exchequer impact (£m)
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This measure is expected to have a negligible impact on the Exchequer.
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
This measure does not affect individuals or households.
It is not expected to impact on family formation, stability or breakdown.
This measure is not expected to have any equalities impact.
Impact on business including civil society organisations
The measure is expected to have a negligible impact on businesses. There will be a negligible one-off cost to businesses who will need to familiarise themselves with the changes.
There will be an ongoing savings to affected businesses who are tenants since the measure clarifies that they are entitled to benefit from the exemption. There will also be an ongoing savings for affected landlords, who will no longer have to become directed utilities in order to claim the exemption on behalf of any tenants.
There will be no impact on civil society organisations.
Operational impact (£m) (HMRC or other)
HMRC does not expect this will have any measurable impact on HMRC’s operational costs.
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be kept under review through communication with affected taxpayer groups.
If you have any questions about this change, contact Andy Jameson on:
- telephone: 03000 586 082
- email: firstname.lastname@example.org