CLIMATE CHANGE LEVY (CCL)

Our specialist team will guide you through the complex world of the Climate Change Levy (CCL).
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VALUE ADDED TAX (VAT)

What is it?

Introduced in the Finance Act 2000, the Climate Change Levy (‘CCL’) is a tax on certain energy commodities when supplied to a business that consumes or burns those commodities on or after the 1st April 2001. CCL’s primary objective is to help establish a price for carbon in the UK by introducing a base carbon cost in the price of downstream energy supplies. CCL is charged by suppliers of taxable energy commodities. Unlike VAT, the buyers of a taxable commodities are not routinely able to reclaim CCL they incur on their energy costs.
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What is VAT
Climate Change Levy (CCL)

Taxable commodities

Commodities falling into the scope of CCL include:
  • Gas of a kind that is supplied by a gas utility
  • Petroleum gas or other gaseous hydrocarbon in a liquid state
  • Coal, coke, lignite, petroleum coke

Fuels that are covered by the hydrocarbon Oil Duties Act, and certain waste fuels are outside the scope of CCL

CCL does not apply to supplies of commodities for domestic or charitable use.

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Establishing the rate of tax

Rates are calculated to reflect the carbon content of each taxable commodity and with a view on HM Government’s target price for carbon.

There are two rates; a main rate for downstream supplies to consumers, and a carbon price support (CPS) rate for fossil fuels used to generate electricity.

Reduced rates of CCL apply to commodities supplied to businesses that are party to a Climate Change Agreement (‘CCA’) with HM Government, under which they have signed up to meet specific reductions in energy consumption and emissions.

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Establishing the rate of tax

Critical and contentious points

Are reliefs and exemptions properly applied to downstream supplies and is adequate evidence held in support of this?

Is the obligation to apply the CPS rate of CCL identified and is the CCL arising properly applied?

Relief is available for certain energy-intensive sectors, and where energy commodities are used for their non-energy properties – has this been identified and claimed?

Landlords supplying energy to tenants may, potentially, access reliefs on their behalf.

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