The Climate Change Levy Explained

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    The climate change crisis is at the forefront of most people’s minds, including business owners and leaders. To reduce our impact on the environment, the UK government has introduced several environmental tax and relief schemes to encourage small, medium and large businesses to operate in a more environmentally conscious manner.

    The Climate Change Levy, along with the net zero carbon emissions scheme, are methods of encouraging businesses to improve their environmental footprint. But what exactly is the Climate Change Levy and how does it affect your business?

    In our guide, we answer your questions and offer some expert tips on how to reduce your carbon emissions to save money on your business energy and help the environment.

    What Are The Climate Change Levy Rates?

    There are two rates for the Climate Change Levy: the main rate and the Carbon Price Support rate.

    Main rate

    Any business that works in the commercial, industrial, agricultural and public service sectors will be charged at the main rate for business gas, electricity and solid fuel and these will be listed on your energy bills.

    The table below illustrates the main Climate Change Levy rates:

    Time Electricity Natural Gas LPG
    1st April 2020 to 31st March 2020 0.811p/kWh 0.406p/kWh 0.02175p/kg
    1st April 2021 to 31st March 2022 0.775p/kWh 0.465p/kWh 0.02175p/kg
    1st April 2022 to 31st March 2023 0.775p/kWh 0.568p/kWh 0.02175p/kg
    1st April 2023 to 31st March 2024 0.775p/kWh 0.672p/kWh 0.02175p/kg

    Carbon Price Support rate

    If your business operates combined heat and power stations, then you will need to pay the Carbon Price Support rate, which is designed to reduce carbon emissions produced by businesses. Your business will become liable for the Carbon Price Support rate when gas passes through the meter at the generating station and LPG, coal or other solid fossil fuels are delivered through the entrance gate to the generating station.

    The table below illustrates these rates:

    Time Gas Petroleum gas Coal or other solid fossil fuels
    1st April 2015 to 31st March 2016 0.00334p/kWh 0.05307p/kWh 1.56860p/GJ
    1st April 2016 to 31st March 2023 0.00331p/kWh 0.05280p/kWh 1.54790p/GJ

    Businesses that generate their own energy, such as through solar panels, are unlikely to pay the levy since they will be classed as a small generator.

    How Is The Climate Change Levy Charged?

    Business energy suppliers oversee adding the Climate Change Levy to your commodities. On your energy bill, the levy charge will feature as a separate line. Once the business energy suppliers have collected the money from their customers, the suppliers will pay it to HM Revenue and Customs.

    All businesses must register for the Climate Change Levy unless they are exempt. If you do not register or you the levy, then you will be charged a penalty of £250 each time.

    Who Is Exempt From Climate Change Levy?

    So, who is exempt from Climate Change Levy? If you meet the following requirements, then your business may be exempt from the levy charge:

    • You are a charity involved with non-commercial activities
    • Your company uses only a small amount of energy, generally around less than 145kWh of gas and 33kWh of electricity a day.
    • You are a domestic energy user, such as homes, caravans, self-catering accommodation, and schools.

    How Can My Business Pay A Reduced Rate On Climate Change Levy?

    Do you want to pay less for your Climate Change Levy charges? Then making your business more energy efficient and reducing your carbon emissions will help you lower your energy bills.

    The most effective way to start saving is by signing the Climate Change Agreement (CCA), which will provide a discount of up to 90% on your CCL rates on electricity and a 65% discount on all other fuels. However, you must make improvements to your business to reduce your average energy consumption.

    When you sign the CCA, you agree to measure and report on your business energy use and carbon emissions against specific targets over a certain period. After this period has passed and your business has achieved those targets, you will receive the discount.

    Struggling for ways of making your business more energy efficient? We’ve listed our expert top tips for reducing your carbon footprint.

    Adjust the thermostat

    Changing the temperature of the office can be a difficult decision. Someone will always be too warm or too cold. However, reducing the temperature by one degree can make a huge difference to your energy bills. 20 degrees is best for offices and around 16 degrees is best for warehouses.

    Work with your employees too. Move those who run warm to desks nearer the windows and doors and for those who are cold, maybe introduce office blankets or hot water bottles.

    Switch energy providers

    Everyone knows that you can lower your energy bills by switching to a different provider, however did you know that you can become more energy efficient by switching to green providers?

    By switching to renewable energy, you can add green credentials to your company and increase your corporate social responsibility. Plus, you’ll be helping the environment and encouraging the development of greener sources of energy.

    Switch off standby

    We’re all guilty of leaving appliances on stand-by, whether that’s at work or at home. But by switching off computers, monitors, and kitchen appliances, you can make a significant saving on your energy bills.

    The Climate Change Levy was designed to encourage businesses, like yours, to reduce their carbon emissions and become more energy efficient. If you need more help with reducing your energy wastage and saving money, then why not get in touch? Our friendly experts will help you find the best deals on your business energy and offer tips on how to reduce your carbon footprint.

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