Energy tax · HMRC
Climate Change Levy: a tax on business energy
The Climate Change Levy (CCL) is a tax on electricity, gas and other fuels supplied to businesses and the public sector.
HMRC says the main rates are listed on the business’s energy bill.
Homes and charities’ non-business use are excluded.
Rates
The main rates, 2025 to 2027
| £ per unit | From 1 April 2025 | From 1 April 2026 | From 1 April 2027 |
|---|---|---|---|
| Electricity (per kWh) | 0.00775 | 0.00801 | 0.00827 |
| Gas (per kWh) | 0.00775 | 0.00801 | 0.00827 |
| LPG (per kg) | 0.02175 | 0.02175 | 0.02175 |
| Any other taxable commodity (per kg) | 0.06064 | 0.06264 | 0.06468 |
Electricity and gas are charged at the same rate per kWh.
A business using 100,000 kWh of electricity in a year from 1 April 2026 would pay £801 of levy at the main rate: an illustration, not a quote.
HMRC also lists Carbon Price Support rates for 1 April 2016 to 31 March 2028: £0.00331 per kWh of gas, £0.05280 per kg of LPG and £1.54790 per GJ of coal.
Who pays
Who pays, and who does not
HMRC says businesses in the industrial, commercial, agricultural and public services sectors pay the main rates.
The Carbon Price Support rates are paid by owners of electricity generating stations and operators of combined heat and power stations; small generators, stand-by generators and generating stations in Northern Ireland do not pay them.
A supply is excluded from the levy if it is for domestic use, or used by a charity for its non-business activities.
| Supply | Treated as domestic below |
|---|---|
| Electricity, metered or unmetered | 1,000 kWh a month |
| Piped gas | 4,397 kWh a month |
| Coal or coke | One tonne of domestic grade fuel |
| LPG in cylinders | Each cylinder under 50 kg net |
| LPG in bulk | Tank capacity under 2 tonnes |
Where qualifying use is at least 60% of the total on mixed-use premises, the whole supply can be treated as excluded.
Exemptions
Supplies exempt from the main rates
HMRC lists supplies exempt from the main rate, including those:
- not for burning or consumption in the UK;
- used in some forms of transport;
- not used as fuel;
- for use in metallurgical and mineralogical processes;
- to electricity producers and to combined heat and power stations, with conditions.
Electricity generated from renewable sources is exempt only if it was generated before 1 August 2015, so a renewable tariff today does not remove the levy.
A business with a climate change agreement pays reduced rates: HMRC’s rates page gives discounts of 92% on electricity, 89% on gas, 77% on LPG and 89% on other commodities.
HMRC’s older overview page still shows 86% for gas; the rates page is the current figure.
The mechanism is a reduced-rate supply under Finance Act 2000 Schedule 6 paragraph 44.
The levy is a tax, not a reporting duty: energy use is disclosed separately under SECR, and how the levy sits beside the UK ETS and CBAM is on carbon tax UK.
Frequently asked
The Climate Change Levy, answered
What is the Climate Change Levy?
A tax on energy supplied to business and public sector users in the UK, created by Schedule 6 to the Finance Act 2000.
It is charged at main rates on electricity, gas, LPG and solid fuels, and at Carbon Price Support rates on fossil fuels used to generate electricity.
Who pays the Climate Change Levy?
Businesses in the industrial, commercial, agricultural and public services sectors pay the main rates, which appear on their energy bills.
The Carbon Price Support rates are paid by owners of electricity generating stations and operators of combined heat and power stations.
What is the Climate Change Levy rate for 2026?
From 1 April 2026 the main rate is £0.00801 per kWh for both electricity and gas, £0.02175 per kg of LPG and £0.06264 per kg for other taxable commodities.
HMRC has published rates from 1 April 2027: £0.00827 per kWh for electricity and gas.
Do households pay the Climate Change Levy?
No. A supply for domestic use is excluded from the levy, as is a supply used by a charity for its non-business activities.
Small supplies, such as electricity below 1,000 kWh a month or piped gas below 4,397 kWh a month, may be treated automatically as domestic.
Is renewable electricity exempt from CCL?
Only electricity generated from renewable sources before 1 August 2015.
A renewable or green tariff today does not remove the levy.
How do you get a Climate Change Levy discount?
An energy-intensive business that has entered into a climate change agreement pays reduced rates.
HMRC’s rates page gives the discount as 92% on electricity, 89% on gas, 77% on LPG and 89% on other taxable commodities.
Is CCL the same as a carbon tax?
No UK instrument is called a carbon tax.
The levy is one of several ways the UK prices energy and carbon, alongside the UK ETS and, from 1 January 2027, UK CBAM.
Sources
Primary sources
Every rate and limit on this page is HMRC’s or the Finance Act’s.
- HMRCClimate Change Levy rates
Main rates 2025 to 2027, CCA percentage discounts and Carbon Price Support rates.
- HMRCEnvironmental taxes, reliefs and schemes for businesses: Climate Change Levy
Who pays the main rates and the Carbon Price Support rates.
- HMRCExemptions from Climate Change Levy
Excluded and exempt supplies; the de minimis limits.
- legislation.gov.ukFinance Act 2000, Schedule 6, paragraph 1
The levy and its care and management.
- legislation.gov.ukFinance Act 2000, Schedule 6, paragraph 44
The reduced-rate supply behind a climate change agreement.