CCL Exemptions and Climate Change Levy…

Climate Change Levy (CCL) is a tax on UK business energy use, and is applied to your energy bill and collected via your supplier on behalf of the UK Government. The scheme is one of many designed to incentivise and promote a switch to a lower carbon future. Up until 01-Aug-15, renewable energy was exempt from CCL. The cost of renewable energy contracts was offset, and sometimes negated by the fact that this product was CCL exempt. Unfortunately, renewable energy generated post 01-Aug-15 no longer benefits from CCL exemption. Ofgem have a great FAQ section on this topic.

There are a number of CCL exemptions still available, the key ones include: domestic supplies, charity exemption, de-minimus consumers (less than 1,000kWh electricity or 4,397kWh gas in a given month), customers with Climate Change Agreements (CCA’s) in place, and for use in metallurgical and mineralogical processes.

If you fit into any of the above categories, and are not currently claiming CCL exemption, or being over charged, please reach out to Direct Power, we have successfully assisted clients to ‘back claim’ CCL charges, resulting in massive credits.

Domestic Supplies:

If you have a Domestic supply, you will be automatically exempt from CCL. Suppliers identify domestic electricity supplies with MPANs that start either 01 or 02.

Charity Exemption:

If you operate a Charity you can ensure you receive the CCL exemption and are charged at the reduced level of VAT of 5% by completing your suppliers ‘VAT reduction’ form. If you are a charity not taking advantage of the CCL exemption and VAT reduction please get in touch with Direct Power. If usage at your site is mixed between Charity and for profit functions, you can still apply for CCL exemption and VAT reduction against the portion of your consumption relating to the charity function.

De-minimus consumers:

CCL exemption and reduced VAT will be automatically applied if you consume less than 1,000kWh electricity or 4,397kWh gas in a given month, you do not need to make a special filling for this qualification.

Climate Change Agreements (CCA):

Are non-mandatory agreements between the most energy intensive industries and the UK’s Environment Agency, designed to promote reductions in energy use and thus lower carbon dioxide emissions. By signing your organisation up to a CCA you are rewarded by a reduced rate of CCL, reductions can be up to:

  • 90% on electricity bills
  • 65% on other fuels

This is an ongoing commitment, that requires administration, tracking and reporting along with investment of resources. Failure to meet energy efficiency targets on an ongoing basis will result in loss of the CCL exemption.

Metallurgical and mineralogical:

Metallurgical and mineralogical processes represent some of the most energy intensive operations in the UK. In an attempt to balance the need to lower the UK’s carbon emissions, with the need to support business and large employers in the UK, levelling the playing field with European competitors, these processes are exempt from CCL.

A basic list of the qualifying processes can be found below, or visit HMRC for complete information:

Mineralogical processes:

  • Manufacture, shaping and processing of flat glass
  • Manufacture of hollow glass, glass fibres
  • Manufacture and processing of other glass, including technical glassware
  • Manufacture of refractory products, ceramic tiles and flags,
  • Manufacture of bricks, tiles and construction products, in baked clay
  • Manufacture of ceramic household and ornamental articles, sanitary fixtures, ceramic insultators, and insulating fittings, other technical ceramic products
  • Manufacture of cement
  • Manufacture of lime and plaster
  • Manufacture of concrete products for construction purposes
  • Manufacture of plaster products for construction purposes
  • Manufacture of ready-mixed concrete
  • Manufacture of mortars
  • Manufacture of fibre cement
  • Manufacture of other articles of concrete, plaster and cement
  • Cutting, shaping and finishing of stone
  • Production of abrasive products
  • Manufacture of other non-metallic mineral products

Metallurgical processes:

  • Manufacture of basic iron and steel and of ferro-alloys
  • Manufacture of tubes, pipes, hollow profiles and related fittings, of steel
  • Manufacture of other products of first processing of steel
  • Precious metals production
  • Aluminium production
  • Lead, zinc, tin and copper production
  • Other non-ferrous metal production
  • Casting of iron and steel
  • Casting of light metals
  • Casting of other non-ferrous metals
  • Forging, pressing, stamping and roll-forming of metal
  • Powder metallurgy
  • Treatment and coating of metals

Please CONTACT US if you need any clarification on the impact of CCL on your company.