Climate change levy

Supplying taxable commodities

The levy is part of a range of measures designed to help the UK meet its legally binding commitment to reduce greenhouse gas emissions. It is chargeable on the industrial and commercial supply of taxable commodities for lighting, heating and power by consumers in the following sectors of business:

industry
commerce
agriculture
public administration
other services

The levy does not apply to taxable commodities used by domestic consumers, or by charities for non-business use.

All revenue raised through the levy is recycled back to business through a 0.3 per cent cut in employers’ national insurance contributions, introduced at the same time as the levy, and support for energy efficiency and low carbon technologies.

The levy is charged on taxable supplies. Taxable supplies are certain supplies of the following taxable commodities:

electricity
natural gas as supplied by a gas utility
petroleum and hydrocarbon gas in a liquid state
coal and lignite
coke, and semi-coke of coal or lignite
petroleum coke

The following are not taxable commodities for levy purposes:

oil
road fuel gas
heat
steam
low value solid fuel (e.g. coal tailings and sweepings) with an open market value of no more than £15.00 per tonne
waste as defined in statute

Some supplies are excluded or exempt from the levy. Others have a reduced or half-rate.

The levy is applied as a specific rate per nominal unit of energy. There is a separate rate for each category of taxable commodity:

electricity = £0.0043 per kilowatt hour

gas supplied by a gas utility or any gas supplied in a gaseous state that is of a kind supplied by a gas utility = £0.0015 per kilowatt hour

any petroleum gas, or other gaseous hydrocarbon supplied in a liquid state = £0.0096 per kilogram

any other taxable commodity = £0.0117 per kilogram

If you are in business and are making or intend to make taxable supplies, you need to contact HM Revenue & Customs (HMRC) and register for the Climate Change Levy. The date you need to register from is the date of making the taxable supply or intention to make the supply. Unlike VAT there is no registration threshold. If you have to register but don’t, you can be compulsorily registered. You may also have to pay a penalty.

You need to complete HMRC Form CCL1 and send it to them within 30 days of becoming liable to register.

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