Climate Change Levy

Taxation in the United Kingdom
UK Government Departments
HM Treasury HM Revenue and Customs
UK Government
VAT Income tax PAYE National Insurance Health and Social Care Levy (proposal abolished) Corporation tax Capital gains tax Motoring taxes Inheritance tax Stamp Duty Stamp Duty Reserve Tax Stamp Duty Land Tax Annual Tax on Enveloped Dwellings Insurance Premium Tax Air Passenger Duty Petroleum Revenue Tax Aggregates Levy Various alcohol- and gambling-related duties Bingo Duty Climate Change Levy Landfill tax Machine Games Duty Tobacco Duty Vehicle Excise Duty
Scottish Government
Revenue Scotland Scottish income tax Land and Buildings Transaction Tax Scottish Landfill Tax Air Departure Tax
Welsh Government
Taxation in Wales Welsh Revenue Authority Welsh Rates of Income Tax Land Transaction Tax Landfill Disposals Tax
Local Government
Council Tax Domestic rates in Northern Ireland Business rates in England Business rates in Wales Business rates in Scotland Business rates in Northern Ireland
v t e

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, it was forecast to cut annual emissions by 2.5 million tonnes by 2010, and forms part of the UK's Climate Change Programme.^{[citation needed]} The levy applies to most energy users, with the notable exceptions of those in the domestic and transport sectors.^{[citation needed]} Electricity from nuclear is taxed even though it causes no direct carbon emissions.^{[citation needed]} Originally electricity generated from new renewables and approved cogeneration schemes was not taxed, but the July 2015 Budget removed this exemption from 1 August 2015, raising £450m/year.^[1]

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.^{[citation needed]}

A reduction of up to 90% from the levy may be gained by energy-intensive users provided they sign a Climate Change Agreement.^[2]

Revenue from the levy was offset by a 0.3% employers' rate reduction in National Insurance. 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. However, revenue recycling was removed at the Spending Review 2010, with the revenue going to the Exchequer. ^[3]

In the 2006 budget it was announced that the levy would in future rise annually in line with inflation, starting from 1 April 2007.^[4] 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. ^[5]

Rates have changed as tabulated below.

See also

• Climate change in the United Kingdom
• Ecological tax reform
• Energy policy of the United Kingdom
• Energy use and conservation in the United Kingdom
• Renewables Obligation

References

Further reading

• House of Commons Environmental Audit Select Committee (19 February 2008). "Reducing Carbon Emissions from UK Business: The role of the Climate Change Levy and Agreements". UK Parliament website. Retrieved 30 August 2009.
  • "Reducing Carbon Emissions from UK Business: The role of the Climate Change Levy and Agreements: Government Response to the Committee's Second Report of Session 2007–08". 20 May 2008. Retrieved 30 August 2009.
• Pearce, D. (2005). "The United Kingdom Climate Change Levy: A study in political economy" (PDF). OECD Environment Directorate, Centre for Tax Policy and Administration. Archived from the original (PDF) on 1 May 2011. Retrieved 21 January 2010.

External links

• HMRC – Climate Change Levy in depth