Climate Change Levy

Climate Change Levy is a tax on energy use for businesses and the public sector, introduced to encourage energy efficiency and reduce carbon emissions.

It applies to non-domestic energy bills, not households.
It is a statutory tax set by HMRC and suppliers are legally required to apply where applicable.
Usually shown as a separate line on business energy invoices as “CCL”.
It is charged per kWh of electricity or gas used, and is shown on customers invoices. However it does have to be explicitly listed on the customers signed contract.
Most business energy contracts include wording such as: “All prices are exclusive of VAT, Climate Change Levy, and any other taxes or levies introduced by government.”
Some organisations can get exemptions or reductions (e.g. charities in certain uses, or via Climate Change Agreements).

Who is exempt?

✅ Charities

A charity is exempt only where the energy is used for non-business activities, such as:

Free community services

Worship

Charity-run shelters

Public halls used for charitable purposes

❗ If a charity runs commercial activities (shops, cafés, paid services), that part is not exempt.

✅ Very small energy supplies

If consumption is below HMRC thresholds:

Electricity: less than 33 kWh per day

Gas: less than 145 kWh per day

These are often called “de minimis” supplies and are treated as domestic for CCL purposes.

Partial relief (not full exemption)

⚠️ Climate Change Agreements (CCAs)

Energy-intensive industries that hold a valid CCA get:

92% discount on electricity CCL

89% discount on gas CCL

Examples of eligible sectors:

Manufacturing

Chemicals

Food & drink processing

Paper, glass, metals

You must: Be in an eligible sector, hold a current CCA certificate and provide it to your supplier

Who is NOT exempt?

❌ Small businesses (by default)
❌ Sole traders
❌ “Low usage but above de minimis”
❌ Schools (teaching use is business use)
❌ Offices, shops, cafés, salons
❌ Nurseries and most childcare settings

Being a small business does not = exemption.