In 2001 the Climate Change Levy (CCL) was introduced to the UK, it is a tax on electricity, gas, LPG and solid fuels used and supplied to businesses and public sector consumers. HMRC are paid the rates on these commodities by energy suppliers, these costs are passed on through billing to non-domestic customers.
It was announced in the 2016 Budget that the main rates of CCL will increase in line with inflation for 2016 to 2017 and rates from 1st April 2016 were legislated in the Finance Act 2015.
CCL main rates for 2017 to 2018 and 2018 to 2019 will be increased in line with RPI to maintain the price signal, seeing an increase in 2018 – 2019 of 48% in one year. But for 2019 to 2020, taxable commodities will be updated to reflect the fuel mix used in electricity generation, the increase in rates of CCL will balance the tax revenues lost by closing the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme. Qualifying businesses will benefit from reduced rates of CCL in the Climate Change Agreements (CCA) scheme – the scheme means some participants will not pay anymore in CCL than they would have under the RPI increase for that year.
In other words, the Climate Change Levy changes mean non-domestic energy users which will be charged per kWh usage of energy and will see a hike in tax delivered over the next few years. The point being that if you are considering upgrading the lighting in your work place or commercial building to a more cost effective LED solution we would suggest that now is definitely the time to do it!