Why Is CCL (Climate Change Levy) increasing?
Depending on your supplier you may or may not have been advised yet about the increases in CCL that comes into effect on 1st April 2019.
Climate Change Levy (CCL) was originally set up as a form of taxation to encourage the more efficient use of energy and thereby reduce carbon dioxide emissions. This year’s increase represents the biggest increase seen since the introduction of the tax in 2016 as demonstrated in the table below.
Climate Change Levy main rates
|Taxable commodity||Rate from 1 April 2016||Rate from 1 April 2017||Rate from 1 April 2018||Rate from 1 April 2019|
|Electricity (£ per kilowatt hour (KWh))||0.00559||0.00568||0.00583||0.00847|
|Natural gas (£ per KWh)||0.00195||0.00198||0.00203||0.00339|
|LPG (£ per kilogram (kg))||0.01251||0.01272||0.01304||0.02175|
|Any other taxable commodity (£ per kg)||0.01526||0.01551||0.01591||0.02653|
So why the huge increase?
To simplify the complex burden and administrative headache to users having at least 1 settled HH meter and using 6,000 Megawatt hours or more currently registered under CRC ( Carbon Reduction Commitment) it was announcement in the Budget 2016 that CRC would cease with the last report being submitted by the end of July 2019 and the final surrender of allowances in October 2019. As CCL was already a simple form of taxation currently in place at this time measured on individual usage it seemed the most logical way to recoup the tax revenue lost by closing CRC . Unfortunately, that now means all businesses will be eligible for the CCL increase and not just those that were registered under the current CRC obligation.
But why am I now paying a higher CCL charge when I never qualified for CRC payments?
Whilst some would argue that doesn’t seem fair, it is based on every businesses usage and therefore could be argued that this represents a lot fairer system, in the fact that larger users will be contributing the most based on their output usage and smaller users will be affected minimally. CCL is purely a taxation for businesses, and this does not affect individuals and domestic use.
Definition of Domestic:
- school and university residential accommodation for students and pupils
- homes for the elderly and disabled
- monasteries, nunneries, and similar religious communities
- children’s homes
- self-catering holiday accommodation
- houses, flats or other dwellings
- supplies to community heating schemes
- armed forces residential accommodation
Unfortunately this is an increase that will affect every business unless you fall into the exemption category of having Gas and Electricity supplies that are eligible to be charged at 5% VAT, A Business using energy generated from renewable resources, A Business using electricity generated from qualifying CHP (combined heat and power)source, Businesses using energy in metallurgical and mineralogical processes. In addition, if you have a CCA (Climate Change Agreement) in place then you will be eligible for discounts of up to 90% on electricity and 65% discount on gas of the CCL charge.
The best way to reduce your CCL charges is to reduce your consumption for your premises and to ensure you are aware of all charges when procuring your energy contracts. Monitoring your energy consumption is the starting point for an energy reduction program. If you would like further clarification on CCL or indeed would like to reduce your consumption either directly or in line with a CCA agreement, then please contact Flame UK on 0115 896 5460 and we can discuss various consumption reduction programs with you.