The Climate Change Levy (CCL) is a tax on energy delivered to business users in the UK. It is designed to incentivise energy efficiency and to reduce carbon emissions.
Introduced on 1 April 2001 under the Finance Act 2000, the CCL has formed part of the UK’s Climate Change Programme. The levy applies to most business users across:
Users in the domestic, charitable and transport sectors are typically exempt.
There are four key groups of taxable commodities: electricity, natural gas, LPG and other commodities (including coal and lignite).
31% increase in Climate Change Levy – 2019
Since the levy was first introduced the rates have remained low, approx. 0.43p/kWh on electricity and 0.15p/kWh on natural gas. However, they are now set to rise substantially – approx. 31% for electricity from 2019.
Why such an increase in costs?
The CRC Energy Efficiency Scheme (CRC) targets the UK’s largest organisations and is a tax based on the amount of carbon each business use. This scheme is due to be abolished in 2019. The chancellor is now using the CCL to recoup any lost revenue. The CCL effects most business – large and small.
|Main rates of CCL|
|Taxable commodity||Rate from 1 April 2016||Rate from 1 April 2017||Rate from 1 April 2018||Rate from 1 April 2019|
|Electricity (£ per kilowatt hour (KWh))||0.00559||0.0057||2%||0.0058||3%||0.0085||31%|
|Natural gas (£ per KWh)||0.00195||0.002||2%||0.002||2%||0.0034||40%|
How to reduce the impact of the CCL on your business
As the CCL is designed to incentivise energy efficiency and to reduce carbon emissions, then businesses who do this will reduce the impact of the CCL on their business.
One of the best ways to reduce your energy bills is to generate your own heat and power on site. This will be the cheapest form of energy you can buy and the greenest. If you install before March 2019 then you could still benefit from the government feed-in-tariff and will not only reduce the amount of energy that you pull from the grid and get taxed on, you will actually receive a payment from the government for every unit of electricity you generate for the next 20 years.
The second way that you can reduce the impact of the CCL is to reduce your energy consumption. This can be done by implementing simple energy management strategies and upgrading your existing plant. Energy Gain UK can typically save between businesses 10-20% by completing an energy audit and introducing free and cost effective solutions.
Finally shop around for your energy supplier, ensure you are on the cheapest tariff available and beware of hidden charges.
At Energy Gain UK we have been helping our clients to power their businesses using renewable energy technologies for the last 9 years. If you would like to find out how your business could be powered by renewable energy technology to help you reduce your energy bills and meet consumer preferences simply click here to send us a few details and we will work out how much you could save and earn.