CLIMATE CHANGE LEVY (CCL)U.K.

Following the Kyoto Protocol the UK government has introduced various measures intended to address the environmental problems resulting from energy production and consumption, the consequent pollution and increase to the average global surface temperature.  One of these measures is the Climate Change Levy (CCL), an additional tax on businesses added to their energy bills.  The revenue raised by this tax is to be redistributed back to businesses by reducing the level of National Insurance contributions, so that the measure is described as 'revenue neutral'.  However, it is not neutral in each case, since a business with many employees and a small energy requirement will obviously benefit, whilst a company with a high energy requirement and few employees will feel the financial effect of the increased taxation.  The intention of the tax is to encourage businesses to reduce their polluting energy consumption as part of a campaign to reduce greenhouse gas emissions by 23% over 1990 levels by 2010.

Levels of tax (in pence per kW hour)

Exempt fuels

Petrol, diesel, and road fuel gases are exempt from the CCL, as are 'waste' fuels from domestic, agricultural and commercial refuse, sewage and landfill gas, and bio-fuels.  Fuels used for electricity generation or non-energy purposes are also exempt, but there may be additional form-filling to gain exemption approval for non-energy use of fuel. Renewable energy and energy from certain specified CHP plant is also exempt. 

Exempt businesses

Charities are exempt, as are business that have very small energy requirements (i.e. comparable to domestic use - equivalent to roughly 35kWh electricity per day or less).  Some businesses which have an extremely high energy consumption have negotiated an 80% reduction in CCL through their relevant sector associations by signing up to energy saving targets set up in agreement with the government. 

Reduce the effect on your business

Cut your consumption by energy saving measures.  Make sure everyone in the company knows what part they can play in avoiding wasteful use of energy.  Consider whether changing your fuel, or investing in more efficient plant and machinery could justify the outlay by reduced energy bills.  There are Enhanced Capital Allowances for investments in certain specified items of 'best-technology' included on a government list. 

Be well informed

The following web sites are sources of more detailed information and opinions on CCL and related issues.

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