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Climate Change Levy
Climate Change Levy is an environmental tax on the industrial and commercial supply of taxable commodities for lighting, heating and power. It is designed as a tax on consumption by businesses in the UK and is not aimed at domestic consumption or on supplies to persons abroad.
The rates of levy
The levy is applied as a specific rate per nominal unit of energy. There is a separate rate for each category of taxable commodity. The rates are based on the energy content of each commodity and are expressed in kilowatt-hours (kWh) for gas and electricity, and in kilograms for liquid petroleum gas and other taxable commodities. This is in recognition of the different billing conventions for the products.
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Taxable commodity supplied
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Rate at which payable if supply is neither a half-rate supply nor a reduced-rate supply
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Electricity
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£0.0043 per kilowatt hour
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Gas supplied by a gas utility or any gas supplied in a gaseous state that is of a kind supplied by a gas utility
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£0.0015 per kilowatt hour
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Any petroleum gas, or other gaseous hydrocarbon supplied in a liquid state*
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£0.0096 per kilogram
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Any other taxable commodity
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£0.0117 per kilogram
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The conversion rate of 2,000 litres per tonne is to be used for levy purposes when converting litres of butane and propane to kilograms.
Electricity requires special rules because a considerable proportion of the energy content of fossil fuels used in electricity generation is lost in combustion, transmission and distribution. As a result of this, calculating the rate for electricity based on the metered energy content of electricity supplied to the consumer would result in under taxation. Instead, the rate to be applied to electricity is set so that:
· it equals the amount of the levy that would have been charged had the inputs to generation been taxed on the basis of their energy content.
The levy per kWh for electricity is therefore higher than for other forms of energy.
Although most taxable supplies are liable to CCL at these rates, some supplies are subject to a reduced rate and there are a number of exemptions that can apply. The levy can also apply to certain self-supplies.
Levy is chargeable on a supply of electricity if the supply is made by an electricity utility; and is either to:
· a non-utility;
· is a deemed self-supply for own use or;
· is not excluded or exempt from the levy.
Taxable commodities
The taxable commodities are:
· 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 and
· Petroleum coke.
But not:
· Oil.
· Road fuel gas.
· Heat.
· Steam.
· Low value solid fuel (for example coal tailings and sweepings) with an open market value of not more than £15.00 per tonne and
· Waste.
It also does not apply to diesel, petrol, and road fuel gases i.e. Liquefied Petroleum Gas (LPG) and Compressed Natural Gas (CNG) used as fuel in road vehicles as these are subject to road fuel duties.
Other mineral oils such as gas oil, fuel oil, and kerosene are not subject to the levy because they are within the scope of excise duties.
Taxable supplies can include certain self-supplies for own use by utilities and producers of taxable commodities. Supplies of gas between gas utilities, and supplies of electricity between electricity utilities, do not attract levy.