Climate Change Levy
The Climate Change Levy (CCL) is a tax on energy delivered to non-domestic users in the United Kingdom. Its aim is to provide an incentive to increase energy efficiency and to reduce carbon emissions; however, there have been ongoing calls to replace it with a proper carbon tax.
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. The levy applies to most energy users, with the notable exceptions of those in the domestic and transport sectors. Electricity from nuclear is taxed even though it causes no direct carbon emissions. 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.
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 but this is no longer the case. 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]
On 1 April 2013 the rates were set to:[5]
| Electricity | 0.541 p/kWh |
| Gas | 0.188 p/kWh |
| LPG | 1.21 p/kg |
| Any other "taxable commodity" | 1.429 p/kg |
In 2019 the rates had increased to [6]
| Electricity | 0.847 p/kWh |
| Gas | 0.339 p/kWh |
| LPG | 2.175 p/kg |
| Any other "taxable commodity" | 2.653 p/kg |
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
- "Summer Budget 2015" (PDF). HM Treasury. 8 July 2015. pp. 73 and 93.
- "CCL Rates and Allowances". Retrieved 1 January 2019.
- "Climate Change Levy rates" (PDF). Retrieved 7 December 2018.
- "Deloitte UK Budget Report 2006". Archived from the original on 10 May 2006. Retrieved 23 June 2006.
- HMRC Reference: Climate Change Levy rates
- "Climate Change Levy rates". GOV.UK. Retrieved 25 May 2019.
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.
- Pearce, D. (2005). "The United Kingdom Climate Change Levy: A study in political economy" (PDF). OECD Environment Directorate, Centre for Tax Policy and Administration. Retrieved 21 January 2010.
