What is the Climate Change Levy and who pays it?

Climate Change Levy is a tax on taxable business energy supplies, normally shown on your energy bill. From April 2026, the main electricity and gas rates are both 0.801p per kWh [S1]. Small supplies and qualifying uses can receive different treatment. On-site generation needs its own supply assessment; a battery does not automatically remove the levy. Checked October 2026.

Last checked 17 October 2026

Who pays Climate Change Levy on business energy?

Climate Change Levy (CCL) applies to taxable energy supplies in commercial, industrial, agricultural and public service activities. GOV.UK says the main-rate charge appears on your business energy bill [S2]. A farm shop, office or charging depot should therefore check the levy alongside its energy rate.

Begin with the supply being billed, its use and its billing period. Your business name alone does not establish liability. Put the meter identifier and the relevant premises on your review sheet, especially if a landlord recharges electricity or several activities share the building. Ask for the underlying energy bill before trying to reconstruct a missing levy line.

This guide explains the rules; it is not tax advice. Check your treatment with your accountant before claiming an exclusion or relief. For the broader bill, use our business electricity prices hub and standing-charge guide.

What are the electricity and gas CCL rates now?

HMRC’s dated rates table gives these main rates from April 2026 [S1]. A kilowatt-hour (kWh) is a unit of energy; kilowatts (kW) measure power. Apply the levy to taxable energy, not the rated power of your charger or boiler.

For illustration, assume your bill contains 10,000 taxable electricity kWh at that rate. The levy is 10,000 × £0.00801 = £80.10 before VAT. An assumed 20,000 taxable gas kWh gives 20,000 × £0.00801 = £160.20. These are bill calculations, not forecasts of your consumption.

Check whether a quoted import price includes CCL before adding it. HMRC also says the VAT value includes CCL where appropriate [S6]. Keep a worksheet with separate columns for energy, levy and VAT. A price described as including CCL must not have the levy added a second time in your solar calculation.

Which small supplies and business uses are excluded?

HMRC’s small-quantity limits include metered electricity not exceeding 1,000 kWh per month and piped gas not exceeding 4,397 kWh per month. Its notice specifies aggregation by supplier, customer and premises [S3]. These are supply tests, not a general exemption for every small company.

Other treatments include non-business charitable use and qualifying mineralogical, metallurgical or non-fuel processes. Qualifying renewable self or direct supplies have separate rules [S3]. Avoid treating a workshop’s whole bill as relieved merely because one process qualifies.

For your review, record the activity, the supporting meter data and the rule you believe applies. Ask your accountant to identify the taxable share. Where different activities share a meter, prepare a documented allocation for review rather than applying the description of the largest activity to every unit.

How do Climate Change Agreements reduce the charge?

A Climate Change Agreement (CCA) is a voluntary arrangement for eligible energy-intensive facilities. The scheme links levy reductions to energy-efficiency or carbon targets [S4]. A large energy bill on its own does not establish eligibility; ask your sector association about the facility and process tests.

HMRC’s current rates table lists CCA discounts of 92% for electricity and 89% for gas [S1]. Those percentages reduce the levy, not your entire energy bill. For an illustrative £100 electricity levy, the remaining amount would be £100 × 8% = £8. For an illustrative £100 gas levy, it would be £100 × 11% = £11, before VAT.

Keep the agreement and certification period with your billing records. HMRC’s certification guidance uses PP10 to support the relief analysis and PP11 to communicate the resulting relief to the supplier [S5]. Ask your accountant to check the calculation and any changes in qualifying use before the paperwork is sent.

How do solar panels and batteries affect CCL?

On-site solar photovoltaic (PV) generation can reduce the grid electricity your site buys. HMRC distinguishes qualifying renewable self or direct supplies from electricity supplied by a utility or an intermediary [S3]. Check ownership and the supply arrangement, especially where another party owns the roof installation.

As an illustration, assume qualifying on-site generation displaces 10,000 otherwise taxable imported kWh. The avoided levy component is 10,000 × £0.00801 = £80.10 before VAT [S1]. This is only the levy component. If your avoided import price already includes CCL, that £80.10 belongs inside that value, not on top of it.

A battery needs a separate assessment. The government’s flexibility response explains that storage facilities may use generator exemptions where the relevant conditions are met [S7]. This is not a blanket exemption for a battery behind your meter. Ask your accountant to review imported charging energy, stored solar, losses, on-site consumption and exports separately. Moving taxable imported energy to a later hour does not itself establish relief.

Read the solar and battery bill calculation and solar self-consumption guide before entering levy reductions into an investment proposal. Use your actual taxable imports as the starting point.

What should you do next?

Gather your bills, relief certificates and proposed generation arrangement. Discuss tax treatment with your accountant, then use the site check and get matched with an installer that covers your area.

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