The Climate Change Levy (CCL) is a tax on energy delivered to non-domestic users in the United Kingdom.

Scope and purpose

Introduced on 1 April 2001 under the

Finance Act 2000 The Finance Act 2000 (c 17) is an Act of Parliament, Act of the Parliament of the United Kingdom prescribing changes to excise, excise duties, Value Added Tax (United Kingdom), Value Added Tax, Income Tax, Corporation Tax, Stamp Duty and Capital ...

, it was forecast to cut annual emissions by 2.5 million tonnes by 2010, and forms part of the UK's Climate Change Programme. The levy applies to most energy users, with the notable exceptions of those in the domestic and transport sectors. Electricity from nuclear is taxed even though it causes no direct carbon emissions. Originally electricity generated from new

renewables Renewable energy is energy that is collected from renewable resources that are naturally replenished on a human timescale. It includes sources such as sunlight, wind, the movement of water, and geothermal heat. Although most renewable energy ...

and approved

cogeneration Cogeneration or combined heat and power (CHP) is the use of a heat engine or power station to generate electricity and useful heat at the same time. Cogeneration is a more efficient use of fuel or heat, because otherwise- wasted heat from elect ...

schemes was not taxed, but the July 2015 Budget removed this exemption from 1 August 2015, raising £450m/year.

Rates

From when it was introduced, the levy was frozen at 0.43p/kWh on electricity, 0.15p/kWh on coal and 0.15p/kWh on

gas Gas is one of the four fundamental states of matter (the others being solid, liquid, and plasma). A pure gas may be made up of individual atoms (e.g. a noble gas like neon), elemental molecules made from one type of atom (e.g. oxygen), or ...

. A reduction of up to 90% from the levy may be gained by energy-intensive users provided they sign a

Climate Change Agreement When the Climate Change Levy was introduced in the United Kingdom, the position of energy-intensive industries was considered, given their energy usage, the requirements of the Integrated Pollution Prevention and Control regime and their exposure ...

. Revenue from the levy was offset by a 0.3% employers' rate reduction in

National Insurance National Insurance (NI) is a fundamental component of the welfare state in the United Kingdom. It acts as a form of social security, since payment of NI contributions establishes entitlement to certain state benefits for workers and their famil ...

. However, the Finance Act 2002 subsequently increased that rate by 1%, reversing the reduction. The revenue used to fund a number of energy efficiency initiatives such as

The Carbon Trust The Carbon Trust was developed and launched in 1999-2001 as part of the development of the Climate Change Levy (CCL), a tax on business energy use that still operates today. The Carbon Trust was originally funded by around £50m of tax revenue ge ...

. However, revenue recycling was removed at the Spending Review 2010, with the revenue going to the Exchequer. In the 2006 budget it was announced that the levy would in future rise annually in line with inflation, starting from 1 April 2007. In the 2018 Budget, it was announced that the rates of the Climate Change Levy would be adjusted until 2022 so that the gas rate reaches 60% of the electricity rate in 2021 to 2022. Rates have changed as tabulated below.

References

External links

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Climate Change Levy in depth
{{Energy in the United Kingdom, govreg Taxation in the United Kingdom Climate change policy in the United Kingdom 2001 introductions

Scope and purpose

Rates

See also

References

Further reading

External links