Since the end of the Carbon Reduction Commitment in 2019, the rates for Climate Change Levy (CCL) have increased considerably. In April 2019 CCL rates increased by 45% on electricity and 67% on gas. From April 2020 the CCL rates on electricity are due to start falling by around 4% each year (as electricity become less carbon intensive to produce), and the rates on mains gas are due to increased between 15% to 20% each year (with rates on LPG remaining unchanged). CCL is being used to recover the tax lost on CRC so now far more organisations are paying a carbon tax through their energy bills.

There are several exemptions that can be claimed to reduce or avoid these rapidly increasing carbon taxes, but typically organisations are failing to inform their energy suppliers of their right to these exemptions and are thus paying unnecessary tax. With the rising costs of CCL there has never been a more important time to check that you are correctly charged.

Exemptions are available for the following:

• Domestic use. This includes armed force accommodation, care homes and sheltered housing, hospices, children’s homes, school and university halls and boarding houses, and self-catering holiday accommodation. This includes where there is a centralised boiler providing heat to multiple flats (community heating schemes) Garages or other ancillary buildings a short distance away from residential blocks are also exempt. The exemption will also apply in mixed-use settings where more then 60% of the total energy usage is used domestically.
• Common Parts. This includes corridors, lifts, hallways and stairwells of residential buildings (often described as landlord common parts).
• Small Quantities usage. Usage under 4,397kWh of gas per month and 1,000kWh of electricity per month is exempt and this is typically automatically not charged by the energy suppliers.
• Non-business use by charities. Note, an exemption is not allowed on premises such as charity shops, village halls or the like unless it is only small quantities (as above).. This aligns to the organisation’s VAT status, and if 60% or more of its activities are zero-rated for VAT due to its charitable status, it should complete a VAT declaration (available from the suppliers websites) and only have 5% VAT levied and no CCL charged. This would apply to churches and some schools.
• CHP units. There are complex rules for CHP units depending on the size, type and date of installation. Advice should be sought if you operate a CHP unit.
• Where organisations have CCAs (Climate Change Agreements) rules on claiming reduce rates and rebates may apply.

It is the areas of landlord common parts and charitable use where the exemptions are frequently not claimed. If this applies to you, then check you energy bills to see if you are being charged for CCL and act if you are.

When there is a change of energy suppliers, the new supplier is not automatically informed of the CCL status; therefore it is crucial to check that the CCL exemption has been registered with any new supplier.
Where exemptions have not been claimed it is possible to recover CCL costs going back for up to the last 6 years.