The Climate Change Levy (CCL) is an environmental tax imposed by the government on taxable commodities as a cost signal to reduce carbon emissions.

Businesses that pay the standard rate of VAT (20%) are charged CCL on their energy bills, although there are exceptions. Businesses that meet the minimal use requirements and are charged the reduced rate of VAT (5%) don’t pay CCL.

The main rate of CCL is applied to business in the following sectors:

• industrial
• agricultural
• public services
• commercial

The CCL rates change from 1st April 2022. This is due to the Government rebalancing the rates to reflect the lowering carbon impact of electricity in comparison to gas consumption. This means that gas CCL rates continue to increase. The aim is for electricity and gas charges to be at a 1:1 ratio by 2025.

From April 2022 businesses on the main rate will pay:

• £0.00775 per kilowatt hour (KWh) for electricty
• £0.00568 per KWh for gas
• £0.02175 per kilogram (kg) of liquefied petroleum gas (LPG)
• £0.04449 per kilogram (kg) for any other taxable commodity

Further information can be found on the UK Government website here.

 

Taxable commodity	Rate from 1 April 2021	Rate from 1 April 2022	Rate from 1 April 2023
Electricity (£ per kilowatt hour (KWh))	0.00775	0.00775	0.00775
Natural gas (£ per KWh)	0.00465	0.00568	0.00672
LPG (£ per kilogram (kg))	0.02175	0.02175	0.02175
Any other taxable commodity (£ per kg)	0.03640	0.04449	0.05258