What is it?
Climate change Levy is a charge that appears right at the bottom of your electricity and gas invoices and is easily overlooked. It is a government charge that was introduced to increase energy efficiency for businesses, and to encourage reduction of carbon emissions. It has not had this effect in the long term, mainly because most businesses have no idea what the charge is for, it is simply paid as part of their energy costs.
Who has to pay?
Almost all businesses in the UK must pay Climate Change Levy. The rate from 1 April 2017 is 0.568p/kWh for electricity, and 0.198p/kWh for gas. This means that for every 1000 kWh of electricity you consume, you must pay an extra £5.68 in tax. Most business electricity supplies consume in excess of this and will be charged CCL on both gas and electricity consumption. Future rates of CCL can be found here.
Are there any exemptions?
Yes, there are several exemptions, but the ones pertinent to housing associations are:
• If the supply is classed as de-minimis and uses less energy than the government threshold
• They are supplied to or from certain combined heat and power (CHP) schemes registered under the CHP quality assurance (CHPQA) programme
• Stair lighting – this does not include lifts / alarms / street lighting
For more information on reliefs and exemptions see the Gov.uk website here.
How much discount is applied?
If the supply is classed as de-minimis, you will receive 100% discount. You will not pay any rate of CCL, and VAT will be applied at 5%If the supply consumes less than 60% of the total consumption for stair lighting, the usage for stair lighting will receive a 100% discount – the remainder of the supply will not if the supply consumed 60% or more of the total consumption for stair lighting, the entire supply will be classed as eligible. You will not pay any rate of CCL, and VAT will be applied at 5%.
More information
If you would like more information on CCL and VAT, please do not hesitate to contact us.
