In short
The Climate Change Levy (CCL) is an environmental tax on electricity, gas and solid fuels used by industrial, commercial, agricultural and public-service businesses. Your supplier charges it per kWh on the bill. Rates are set from 1 April each year, with exemptions for domestic, charity and small users and reduced rates for Climate Change Agreement holders.
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What the Climate Change Levy is
The Climate Change Levy is a UK environmental tax on energy used by businesses. HMRC sets the rules; your energy supplier charges the levy on your bill and pays it over to HMRC.
It has two parts:
- Main rates: paid by businesses on the electricity, gas and solid fuels they use. This is the CCL you see on your energy bill.
- Carbon Price Support (CPS) rates: paid by owners of electricity generating stations and operators of combined heat and power (CHP) stations on the fossil fuels they use to generate electricity. Ordinary business customers do not pay CPS directly.
Gas and electricity are charged per kWh. LPG and other taxable commodities, such as coal and coke, are charged per kilogram.
Who pays the Climate Change Levy
You pay the main rates of CCL if your business is in one of these sectors, according to gov.uk:
- Industrial
- Commercial
- Agricultural
- Public services
That covers most organisations, from offices and shops to farms, factories and public bodies. HMRC's guidance on reliefs notes that schools, colleges and universities pay the main rate unless the institution is a charity using the energy for non-business activities.
You do not pay the main rate on certain supplies, for example if you are a domestic energy user, a charity using energy for non-business activities, or a business using only small amounts of energy.
How CCL rates are set
The government sets CCL rates in advance, and they take effect from 1 April each year. The current rates and those already announced are published on gov.uk's Climate Change Levy rates page. In recent years:
- The main rates for gas and electricity have been the same per kWh since 1 April 2024. Before then, gas was charged at a lower rate than electricity.
- The main rates rose on 1 April 2026.
- Rates for 1 April 2027 have already been published.
We do not quote the figures here, because they change each year and your supplier applies whatever rate is in force. To check what you are paying, multiply your kWh for the period by the rate on gov.uk and compare it with the CCL line on your bill.
CCL is charged at the rate in force whatever kind of contract you are on, so a fixed-price contract does not fix the CCL rate. VAT is then charged on top: HMRC's VAT guidance says the value of an energy supply for VAT includes CCL where it applies.
Exemptions: when CCL is not charged
Some supplies are outside the main rates altogether. According to gov.uk and HMRC's guidance on reliefs:
| Exemption or exclusion | What it means |
|---|---|
| Domestic use | Energy used in homes and certain residential accommodation is not subject to CCL. |
| Charity non-business use | A charity's non-business activities are excluded. Business activities by charities, such as selling donated goods or hiring out halls, are not. |
| Small (de minimis) supplies | Supplies of up to 1,000 kWh a month of electricity, or up to 4,397 kWh a month of piped gas, to a customer at one premises are treated as domestic. |
| Mixed use | If at least 60% of a premises' use is domestic or charity non-business, the whole supply can be treated that way; below 60%, CCL applies to the part that does not qualify. |
| Fuel not used in the UK | Energy that will not be used in the UK is exempt. |
| CHP schemes | Certain supplies to or from combined heat and power schemes registered under the CHP Quality Assurance (CHPQA) programme. |
| Electricity generation | Fuels used to produce electricity in a generating station of 2MW or more. |
| Not used as fuel | Commodities used for something other than fuel, and certain forms of transport. |
| Renewable electricity generated before 1 August 2015 | Exempt under the gov.uk list. Renewable electricity supplied by an energy supplier and generated since then is taxable in the normal way. |
| Self and direct supplies of renewable electricity | Renewable electricity a business generates and uses itself, or buys directly from a renewable generator with no third party taking ownership, is not liable to CCL under the conditions in HMRC's notice. |
| Mineralogical and metallurgical processes | Energy used in qualifying mineralogical or metallurgical processes is exempt from the main rates, subject to certification. |
These are the main headings, not the full detail. Each relief has conditions, and some require a declaration to your supplier. HMRC's Excise Notice CCL1/3 sets them out.
Not sure which option suits you? Ask us
Tell us about your premises and usage and we will explain the options that fit.
Green tariffs still pay CCL
A common surprise: buying a green electricity tariff for your business does not remove CCL. HMRC's guidance says renewable electricity supplied by an energy supplier is a taxable supply, and gov.uk limits the renewable exemption to electricity generated before 1 August 2015. Green gas bought through a supplier is also charged CCL like any other piped gas.
The exception is renewable electricity you generate and use yourself, such as from rooftop solar, or buy directly from a renewable generator with no third party in between: HMRC's Excise Notice CCL1/3 says those self and direct supplies are not liable to CCL.
That does not make a green tariff any less valid. It simply means you should expect to see CCL on the bill either way.
Reduced rates with a Climate Change Agreement
Energy-intensive businesses can pay a reduced rate of CCL by entering a Climate Change Agreement (CCA) with the Environment Agency. In return for the discount, the business agrees to energy efficiency or carbon reduction targets for its eligible facilities.
How it works in outline:
- Check whether your sector and processes are eligible. Gov.uk has an eligibility check, and your industry trade association can advise.
- Enter an agreement covering the eligible facility and agree targets.
- The Environment Agency certifies the facility as covered by the agreement for a set period, and the supplier applies the reduced rate to supplies to it in that period.
- Report against your targets under the scheme rules.
The size of the reduction differs between electricity, gas, LPG and other fuels and is published on gov.uk. Manufacturers and other industrial users are the businesses most likely to qualify; see energy for manufacturers for how CCAs fit with half-hourly metering and contract choices.
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CCL, VAT and your bill
CCL appears as its own line on your business energy bill, charged on your kWh for the period. If you are entitled to an exemption or reduced rate and it is not showing, raise it with your supplier, which may ask for a declaration or certificate.
The same tests often apply to VAT. Domestic use, charity non-business use, small de minimis supplies and the 60% mixed-use rule can also mean a lower VAT rate. Our guide to reduced rate VAT on business energy explains the VAT side, and business energy bills explained shows where both taxes sit on the bill.
Checking the CCL on your bill
A few minutes with a bill and gov.uk's rates page will tell you whether CCL is being charged as you expect:
- Find the CCL line and the kWh it is charged on. It should match the consumption on the bill.
- Check the rate against gov.uk's Climate Change Levy rates for the period. A bill that spans 1 April may use two rates.
- If your supply is within the de minimis limits, or used for domestic or charity non-business purposes, there should be no CCL on that part.
- If you hold a Climate Change Agreement, check the reduced rate is applied to the right facility.
- If you are a mixed-use site, check the CCL treatment matches the percentage you have declared.
If something looks wrong, raise it with your supplier in writing, with any certificate or evidence it needs.
How we can help
We act as an agent for Fidelity Energy, an independent business energy consultancy and broker, and introduce you to it. We help you gather the bills and supply details for each site. Fidelity Energy gets quotes from its network of business energy suppliers and arranges the contract you choose. We can help you check whether CCL is being charged on the right basis and point you to HMRC's guidance; we do not give tax advice, so for exemptions and Climate Change Agreements please also speak to your accountant or trade association.
Questions about the Climate Change Levy on your bills, or want a quote? Contact us. To compare offers or change supplier, see business energy comparison on our sister site.
How Forever Communications helps with business gas and electricity
Forever Communications is part of Forever Group, which looks after phone systems, business mobiles and connectivity for UK organisations. For business electricity and gas, we work as an agent of Fidelity Energy, an independent business energy broker that prices your requirements with the suppliers on its panel. We are not an energy supplier, and neither is Fidelity Energy.
- Make sense of your bills: we can help you read unit rates, standing charges, meter details and the other costs on your invoices
- Like-for-like quotes: we help you gather your meter numbers, consumption and contract end dates so suppliers quote on the same basis
- The right tariff type: we can talk you through fixed, flexible and pass-through contracts, green electricity and green gas options before you decide
- Better timing: we help you plan a renewal ahead of your contract end date, or move off deemed and out-of-contract rates when you move premises
- Your choice: you decide which quote, if any, to accept; prices and terms are set by the suppliers and confirmed at quote, including the broker commission
We work with offices, shops, hospitality, landlords, manufacturers and multi-site organisations. Send us a recent bill and we can take it from there.
Frequently asked questions
Do businesses pay climate change levy?
Yes, most do. Businesses in the industrial, commercial, agricultural and public-service sectors pay the main rate of CCL on the electricity and gas they use. Domestic use, charity non-business use and small de minimis supplies are not charged.
What is the climate change levy on my energy bill?
It is an environmental tax that your supplier charges per kWh on business electricity and gas and pays to HMRC. It appears as a separate line on the bill, and VAT is charged on top of it.
When do climate change levy rates change?
CCL rates are set by the government and take effect from 1 April each year. The rates rose on 1 April 2026 and the rates for 1 April 2027 have already been published on gov.uk.
Is renewable electricity exempt from the climate change levy?
Not when it is bought from an energy supplier on a green tariff: that is a taxable supply, and the exemption for supplied renewable electricity only covers electricity generated before 1 August 2015. Renewable electricity a business generates and uses itself, or buys directly from a generator with no third party in between, is not liable.
How can a business get a reduced rate of climate change levy?
Energy-intensive businesses in eligible sectors can enter a Climate Change Agreement with the Environment Agency, agreeing efficiency or carbon targets in return for a reduced CCL rate. Check eligibility on gov.uk or with your trade association.
Do charities pay climate change levy?
Not on energy used for non-business activities. A charity's business activities, such as selling donated goods or hiring out premises, are charged unless the supply is within the de minimis limits.
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