| TL;DR: The Climate Change Levy taxes business gas and electricity per kWh. From 1 April 2026 the main rate is 0.801p per kWh for both fuels, rising to 0.827p in 2027. Low users and charities can be exempt. Last reviewed July 2026 |
| BUSINESS ENERGY : CLIMATE CHANGE LEVY |
The Climate Change Levy (CCL) is a UK tax on the gas and electricity used by businesses and public sector bodies. From 1 April 2026 the main rate is 0.801p per kWh for both electricity and gas. It is charged per unit of energy used, collected by the supplier, and shown as a separate line on the bill.
KEY FACTS
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What the Climate Change Levy is
The Climate Change Levy is a tax introduced in 2001 under the Finance Act 2000, charged on taxable commodities supplied to non-domestic users to encourage energy efficiency.
It is collected by the energy supplier on behalf of HMRC and appears as a separate line on the business energy bill, alongside the unit rate and standing charge.
The 2026 rates
From 1 April 2026 the main rate is 0.801p per kWh for both electricity and gas, the two fuels having been aligned after a rebalancing completed in 2024. From 1 April 2027 the rate rises to 0.827p per kWh.
LPG remains frozen at 2.175p per kg and solid fuels are charged at 6.264p per kg. A separate Carbon Price Support rate applies only to electricity generators, not to typical business users.
What the levy costs: a worked example
The levy is charged only on the units used, not on the standing charge. At the 2026 main rate of 0.801p per kWh, a business using 40,000 kWh of electricity a year pays 40,000 multiplied by 0.801p, which is £320.40 in levy before VAT. VAT at 20% is then applied to a total that already includes the levy.
| CCL rate | Electricity | Gas |
| Main rate (from 1 Apr 2026) | 0.801p per kWh | 0.801p per kWh |
| With a Climate Change Agreement | 0.0641p per kWh (92% off) | 0.0881p per kWh (89% off) |
| Main rate (from 1 Apr 2027) | 0.827p per kWh | 0.827p per kWh |
A Climate Change Agreement removes most of the levy for eligible energy-intensive sites, but it requires meeting an efficiency target agreed with the Environment Agency.
Who pays and who is exempt
Most commercial, industrial, agricultural and public sector organisations pay the levy on their gas and electricity. Domestic use and a charity's non-business use are excluded.
A 100% renewable electricity supply backed by REGO certificates removes the levy on power, and the reduced 5% VAT rate and CCL exemption are linked: qualify for one and you generally qualify for the other.
De minimis and the VAT link
Under the de minimis rule, a supply averaging no more than 33 kWh of electricity a day (around 1,000 kWh a month) or 145 kWh of gas a day (around 4,397 kWh a month) is treated as domestic.
Such supplies attract 5% VAT and carry no CCL. Because the test is based on the billing period, a seasonal business can fall below the threshold in quieter months.
Climate Change Agreements
Energy-intensive sectors can hold a Climate Change Agreement with the Environment Agency, committing to efficiency targets in return for a large discount.
For 2026 the discount is 92% on electricity and 89% on gas, so a CCA holder pays only 8% and 11% of the respective main rates.
How to claim relief
Relief is claimed by giving the supplier a PP11 certificate, after which the correct treatment is applied to the bill. A charity must split business from non-business use.
Where at least 60% of a premises' use is domestic or non-business charity use, the whole supply can be treated on that basis.
| Note: CCL rates are set by HMRC and usually change on 1 April each year; check gov.uk for the current published figures before relying on them. |
| RELATED GUIDES |
| Disclaimer: Kael Tripton Ltd is an independent editorial publisher, ICO-registered (ZC135439). This guide is general information, not financial, legal or energy-broking advice, and carries no commission or referral arrangement. Rates and figures are correct as at the review date; verify current figures with the primary sources listed before acting. |
Frequently asked questions
How much is the Climate Change Levy in 2026?
From 1 April 2026 the main rate is 0.801p per kWh for both electricity and gas, rising to 0.827p from 1 April 2027.
Do small businesses pay the Climate Change Levy?
Most do, but businesses below the de minimis threshold (33 kWh electricity or 145 kWh gas per day) are treated as domestic, paying 5% VAT and no CCL.
How can a business reduce its CCL?
Options include a Climate Change Agreement for eligible sectors, REGO-backed renewable electricity, and reducing consumption. Relief is claimed with a PP11 certificate.
Is CCL charged on domestic energy?
No. The levy applies only to non-domestic supplies. Domestic use and qualifying charity non-business use are exempt.
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