What is Climate Change Levy and how will due increase affect your business?

In response to global warming, the UK government (along with many other countries in Europe) prescribed various environmental taxes and relief schemes in an effort to encourage businesses to reduce their carbon footprint. The Climate Change Levy (CCL) is one of these measures.

The CCL is an environmental tax charged on the energy used by businesses, and applies to the industrial, commercial and agricultural sectors as well as public services. The tax is charged on ‘taxable commodities’ for heating, lighting and power purposes.

Virtually every business in the UK has to pay the CCL but there are a few exceptions: very small businesses, charitable businesses engaged in non-commercial activities, businesses generating electricity from a renewable source and using it exclusively on-site, and businesses investing in Combined Heat and Power (CHP).

If you’ve been in business since 2001 (when the CCL was introduced), likely you’re already aware of all of the above but what you may not know is that rates are set to increase more than ever before! The reason for the increase is to limit the effects of climate change and pollution, which really are negatively impacting our planet.

Typically, the CCL has risen by 3 per cent each year but April 2019 will see a drastic rise in rates, with a 45 per cent CCL increase on electricity and 67 percent increase on gas and other fuel.

This could affect your business’s bottom line – especially if you’re a small to medium-size enterprise! But there are a couple of things that you can do to mitigate the impact of the CCL increase, namely: invest in small scale energy generation or simply reduce energy consumption! Non-intensive, large energy users such as hospitals, supermarkets, and office blocks may see and overall reduction if savings from the abolition of the Carbon Reduction Comittment (as of April 2019) offsets the rise in CCL rates. Businesses (of all sizes) may also need to re-strategise their finances with the inclusion of a bigger levy budget to cover the spike in rates.

For further details on the CCL increase, visit Touchstoneservices.co.uk or Britishgas.co.uk.

For all your energy related questions, feel free to contact the CH Systems team on 0208 302 8149 or info@chsystems.cc.