Climate Change Levy
Introduced in April 2001, the Climate Change Levy (CCL) is essentially a business tax on the
use of energy sources that contribute to greenhouse gases and other polluting emissions.
A business tax on the use of energy sources.
Why impose a levy?
Following the recommendations in Lord Marshall's 1998 report on economic instruments and
the business use of energy, the Government decided that a tax on energy would be an
effective way of promoting reductions in its use.
Why restrict the use of energy?
Following the Kyoto Climate Change Conference, the UK Government entered into a legally
binding commitment to reduce the UK's total greenhouse emissions by 12.5% below 1990
levels, by the period 2008 to 2012. A domestic goal of 20% reduction in Carbon Dioxide
emissions by the year 2020 was also set.
The Government has undertaken a commitment to reduce greenhouse emissions.
Only domestic and transport sectors are exempt from the tax.
How much is raised by the Climate Change Levy and how is it used ?
It is estimated that approximately £1.0 billion per annum is raised.
The tax is intended to be fiscally neutral, being recycled back to business by cutting
employers National Insurance contributions (NIC) by 0.3% and funding energy efficiency
initiatives.
All other sectors of the economy are required to pay a levy.
What is the structure of the levy?
Levy on electricity 0.43 pence per kWh
Levy on natural gas*, coal 0.15 pence per kWh
Levy on LPG 0.07 pence per kWh
*The levy on natural gas does not apply in Northern Ireland.
Note : Oil, good quality CHP schemes and renewable energy resources are exempt from the
levy.
This represents a 20% increase on gas bills based on average fuel prices.
What can the Ambi-Rad Group do to reduce the impact on business costs?
Help you prepare an energy audit and action plan which will identify various measures for
reducing energy use.
Supply energy efficient products that provide 100% capital allowances in the first year under
the Enhanced Capital Allowances scheme.
Clearly, businesses that are energy intensive and employ few people will see a net
increase in energy costs. |