Climate Change Levy
| Taxation in the United Kingdom |
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| File:Coat of arms of the United Kingdom (2024, lesser arms).svg |
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The Climate Change Levy (CCL) is a tax on energy delivered to non-domestic users in the United Kingdom.
Scope and purpose
[edit | edit source]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
[edit | edit source]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.
| Fuel type | Rate |
|---|---|
| Electricity | 0.541 p/kWh |
| Gas | 0.188 p/kWh |
| LPG | 1.21 p/kg |
| Any other "taxable commodity" | 1.429 p/kg |
| Fuel type | Rate |
|---|---|
| Electricity | 0.847 p/kWh |
| Gas | 0.339 p/kWh |
| LPG | 2.175 p/kg |
| Any other "taxable commodity" | 2.653 p/kg |
| Fuel type | Rate |
|---|---|
| Electricity | 0.811 p/kWh |
| Gas | 0.406 p/kWh |
| LPG | 2.175 p/kg |
| Any other "taxable commodity" | 3.174 p/kg |
See also
[edit | edit source]- Climate change in the United Kingdom
- Environmental tax
- Energy policy of the United Kingdom
- Energy in the United Kingdom
- Renewables Obligation (United Kingdom)
References
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- ^ HMRC Reference: Climate Change Levy rates
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Further reading
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