Understanding the Climate Change Levy (CCL) on Commercial Bills 

Not every business pays it. Energy for domestic use, a charity's non-business activities and very small supplies (no more than 1,000 kWh of electricity or 4,397 kWh of gas a month) is excluded. Energy intensive sites with a Climate Change Agreement pay 92% less on electricity and 89% less on gas. If you think you're paying CCL you don't owe, you can claim relief with forms PP10 and PP11 and go back up to four years.

Key points

• CCL is charged on the energy you use, not on your standing charge.
• Electricity and gas both pay 0.801p per kWh in 2026/27 and 0.827p per kWh in 2027/28.
• VAT is charged on top of CCL, so most businesses pay 20% VAT on the levy too.
• A typical business using 37,500 kWh of electricity a year pays about £300 in CCL in 2026/27 before VAT.
• Very low users, domestic premises and charities' non-business use don't pay it.
• If at least 60% of a supply is for domestic or charity non-business use, the whole supply is excluded.
• A renewable or green tariff doesn't remove CCL. That exemption ended in 2015.
• Relief isn't automatic. You must give your supplier a PP11 certificate, and give a new one each time you switch supplier.

What is the Climate Change Levy?

The Climate Change Levy is a tax on energy delivered to non-domestic users in the UK. It was introduced in April 2001 under the Finance Act 2000 to encourage businesses to use energy more efficiently and cut emissions. GOV.UK describes it as a tax on energy for businesses in the industrial, commercial, agricultural and public services sectors.

CCL has two parts:

• The main rates, which apply to the electricity, gas, LPG and solid fuels a business uses. This is the part that appears on commercial energy bills and the focus of this guide.
• Carbon Price Support (CPS) rates, which apply to fossil fuels used to generate electricity. These are paid by power station and combined heat and power (CHP) operators, not by most businesses.

You don't register for CCL or pay it to HMRC yourself. Your supplier charges it on your bill and passes it on. Your job is to make sure you're charged the right amount, and not charged at all if you qualify for an exclusion or relief.

Climate Change Levy rates 2023 to 2028

HMRC sets CCL rates for each tax year starting on 1 April. The main rates for 2027/28 have already been confirmed, so you can budget ahead. 

How much CCL will your business pay?

CCL is simple to work out: multiply the kWh you use by the rate. The table shows the annual levy at different levels of use, assuming none of the supply is excluded or relieved.

Very low users may not pay CCL at all

If your business uses less than about 12,000 kWh of electricity a year (an average of no more than 1,000 kWh a month), your electricity may fall under the de minimis limit and be excluded from CCL. That's more common than many people think: government ND-NEED data published in August 2025 puts the median electricity use of non-domestic buildings in England and Wales at around 6,600 kWh a year. The same applies to gas below about 52,764 kWh a year (no more than 4,397 kWh a month). The limit is tested on the rate of supply, so a business with a few high-use winter months may be over it on some bills. More on this below.

How CCL is shown and calculated on your bill

CCL usually appears as its own line on your bill, below your unit rate and standing charge and above VAT. It's calculated like this:

CCL = kWh used in the billing period × CCL rate

For example, a business using 3,000 kWh of gas in a month in 2026/27 pays 3,000 × £0.00801 = £24.03 in CCL before VAT.

A few rules affect how the line is worked out:

• CCL is charged on consumption only. Your standing charge doesn't attract CCL.
• VAT is added after CCL, because HMRC treats the levy as part of the value of your supply. Most businesses pay 20% VAT, so the levy effectively costs 0.961p per kWh in 2026/27.
• CCL is a government tax, separate from the unit rate you agree with your supplier. The rate on your bill follows HMRC's rate for the date the energy is supplied, so check how your contract treats changes on 1 April, even if your unit rate is fixed.
• When you compare quotes, check whether prices include or exclude CCL and VAT so you're comparing like with like.

Our guide on how to read the rest of your business energy bill walks through every other line, from meter readings to standing charges.

Who pays the Climate Change Levy and who doesn't?

Most businesses and public sector organisations pay CCL on their energy. HMRC's Excise Notice CCL1/3 sets out the supplies that are excluded from the main rates (never taxable) and those that are exempt (taxable in principle, but relieved if you certify the use). Here are the ones that matter to most businesses.

Charities and community buildings

A charity only avoids CCL on energy used for non-business activities. HMRC lists selling donated goods, hiring out charity-run buildings such as village halls, and providing membership benefits as business activities, so CCL can apply to them. If a charity does both on the same premises, it can split its consumption and tell its supplier the non-business share. Our guide to energy for charities covers the wider picture.

The de minimis rule: when small supplies are excluded

HMRC treats small quantities of fuel and power as if they were for domestic use, even when they're supplied to a business. That means no CCL, and reduced-rate VAT instead of 20%.

The 60% rule for mixed-use premises

Some premises are used partly for domestic or charity non-business purposes and partly for business. Think of a pub with a flat upstairs, a farm with a farmhouse on the same meter, or a church hall that's also hired out. HMRC's rule is:

• If at least 60% of the energy is for domestic or charity non-business use, the whole supply is excluded from CCL.
• If it's less than 60%, CCL is charged on the part that doesn't qualify.

Worked example: a business uses 50,000 kWh of electricity a year at premises with a flat above.

• If 70% of use is domestic, no CCL is charged on any of the 50,000 kWh.
• If 40% of use is domestic, CCL is charged on the other 60%, which is 30,000 kWh × £0.00801 = £240.30 in 2026/27.

To get this treatment, give your supplier a VAT declaration stating the percentage of qualifying use for each premises. Base it on sub-meter readings if you have them, or a reasonable estimate if you don't.

Climate Change Agreements: the CCL discount for energy intensive businesses

A Climate Change Agreement (CCA) is a voluntary agreement that gives eligible energy intensive sites a large discount on CCL in return for meeting energy efficiency or carbon targets. Policy is set by the Department for Energy Security and Net Zero (DESNZ), and the Environment Agency runs the scheme.

The new CCA scheme from 2026

A new CCA scheme started on 1 January 2026. Under the DESNZ Climate Change Agreements statutory guidance, the Environment Agency will run it until 31 March 2033, with three target periods:

• Target Period 7: 1 January 2026 to 31 December 2026
• Target Period 8: 1 January 2027 to 31 December 2028
• Target Period 9: 1 January 2029 to 31 December 2030

Targets are measured against a 2022 base year. Sites that miss a target can pay a buy-out fee to keep their discount. If they don't, they can lose CCA certification for the next period and pay the full CCL rate.

Who can get a CCA?

CCAs are for energy intensive processes covered by a sector association's umbrella agreement, such as manufacturing, food and drink processing, chemicals and some agricultural activities. Two tests matter:

• Your process must be listed in the umbrella agreement for your sector.
• At least 70% of the energy supplied to the facility must be used in the eligible process (the 70% rule). If you can't show that, you'll need permanent sub-metering of the eligible part.

New entrants apply through their sector association, which applies to the Environment Agency on their behalf. Applications to join an existing umbrella agreement are open from 1 January to 31 August each year from 2026 to 2029. Once the Environment Agency issues a CCA certificate, you claim the discount from your supplier with a PP10 and PP11.

A CCA isn't the only support for energy intensive industries. Eligible businesses can also claim through the Network Charging Compensation Scheme, which is a separate scheme with its own rules.

How to claim CCL relief: PP10 and PP11 step by step

Domestic, charity and de minimis exclusions are claimed through VAT declarations. Most other reliefs, including CCA discounts and process exemptions, use two HMRC forms:

• PP10, the relief supporting analysis. You list each relief you're claiming and estimate the energy used for each, which gives your overall relief percentage. You send it to HMRC.
• PP11, the supplier certificate. It takes the percentage from your PP10 for one fuel at one account, so your supplier can apply the right rate. You send it to your supplier.

1. Work out which reliefs apply and how much of your energy qualifies. Use sub-meter data where you have it and best estimates where you don't.
2. Complete the PP10 and send it to HMRC. Keep a copy.
3. Complete a PP11 for each fuel and send it to your supplier. Suppliers must accept paper certificates. Keep proof of the date it arrived, such as recorded delivery.
4. Your supplier must process a correctly completed PP11 within 5 working days. Check your next bill shows the reduced CCL.
5. Review your entitlement at least once a year, and whenever your use or your business changes.
6. Submit a new PP10 and PP11 at least every 5 years, as that's the longest a PP11 can stay valid.
7. When you switch supplier, send a new PP11 to the new supplier and an updated PP10 to HMRC before your first bill. Relief doesn't transfer automatically.
8. If your business changes hands, the new owner must submit their own PP10 and PP11.

Be accurate. If your certificate claims too much relief, the excess is treated as CCL you owe, and errors that cause an underpayment can lead to a penalty.

How to claim back CCL you shouldn't have paid

Overpaid CCL usually happens after a change of supplier, a change of ownership, or a supplier not knowing about your relief. How you claim depends on whether a certificate was in place.

How to check the CCL on your business energy bill

Run through these checks once a year, after 1 April when the rate changes, and every time you switch supplier.

1. Find the CCL line and check the rate. From 1 April 2026 it should be 0.801p per kWh for electricity and gas.
2. Check the kWh. The CCL line should use the same kWh as your energy charge, not a higher figure.
3. Check bills that span 1 April. Usage after that date should be charged at the new rate.
4. Check whether you're below the de minimis limit. If you use no more than 1,000 kWh of electricity or 4,397 kWh of gas a month, there should usually be no CCL line.
5. Check for domestic or charity use. If part of the supply is domestic or a charity's non-business use, make sure your supplier has a VAT declaration with the right percentage.
6. Check your relief after switching. If you have a CCA or exemption, confirm your new supplier has your PP11 and is applying it.
7. Check the VAT. VAT should be calculated on the total including CCL, at the rate that matches your usage.
8. Raise any errors in writing with your supplier and ask for corrected bills.

Common CCL mistakes and how to fix them

Does a green tariff avoid the Climate Change Levy?

No. Renewable electricity bought from a supplier has been taxable since 1 August 2015, when the government removed the CCL exemption for renewable source electricity. A business on a 100% renewable tariff pays the same CCL as one on a standard tariff. The exception is renewable electricity you generate yourself and use on site, or buy directly from a generator under a contract with no intermediary taking ownership, which isn't subject to the main rates.

So a green tariff can support your environmental reporting, but not your tax bill. To understand what a REGO-backed tariff does and doesn't prove, read our guide to green tariff evidence.

CCL compared with other charges on your bill

CCL is often confused with other government charges. It's the only one of these that's a tax collected by HMRC.

How we can help

CCL is set by HMRC, so no supplier can offer you a lower rate. What you can control is making sure you only pay it where you should, and getting the best price on the energy it's charged on.

• When you switch or renew through us, ask your account manager how your new supplier will apply CCL and VAT, and send your PP11 or VAT declaration to the new supplier before your first bill so any relief carries over.
• With a letter of authority in place, your account manager can speak to suppliers on your behalf, which makes it easier to query a CCL charge that looks wrong.
• For larger and multi-site businesses, our energy procurement service looks at contract structure, pass-through charges and timing alongside price.
• Using less energy reduces your CCL as well as your energy cost. A business energy audit is a good place to start.

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